Launching a start-up is like jumping off a cliff. It’s exhilarating and frightening at the same time. Without guidance, it’s easy for things to go wrong financially at your new business. However, if you are determined to reach your lofty goals, our expert tax accountant advice will get your start-up started.
Develop a Bookkeeping System
Whether your business is brand-new or established, bookkeeping is part and parcel of the job. It’s a detailed process that involves the recording, storing and retrieving of financial transactions.
On a daily, weekly or monthly basis you must:
- Record all transactions
- Document and file receipts
- Review unpaid bills
- Pay vendors
- Prepare and send invoices
- Review projected cash flow
When you launch a business, you must also determine a suitable bookkeeping method. You could choose to do it yourself or enlist the help of a tax accountant. Either way, you need to decide between using the cash or accrual method of accounting.
Set up a Payroll System
Unless you are running your start-up all by yourself, you will have to set up a functioning payroll system to regularly compensate employees.
- Decide if employees will be full-time or independent contractors
- Choose to pay a yearly salary or an hourly wage
- Establish a regular pay schedule
Understand your Tax Obligations
Your Federal tax obligations are determined by your business entity type, such as a sole proprietorship, partnership or S corporation.
Your Federal tax obligations include:
- Income tax
- Social Security and Medicare taxes
- Estimated tax
- Employer tax, such as the withholding tax
- Excise tax
Employers are also required to pay their state certain employment taxes, such as workers’ compensation insurance and unemployment insurance taxes.
Calculate Profit Margins
A profit and loss statement tells you how much has been earned and how much has been spent. You can use it to measure against your budget for the month, the quarter or the year. Then, you can compare actual numbers to planned numbers to determine if you are spending too much, not enough or just the right amount.
Continually Re-evaluate your Methods
If you have just launched your own company, business accounting is a brand new responsibility. It is something you can revise and improve over time. For example, you may find there are more financial benefits to having hourly workers than salaried employees or vice versa.
Call a Professional Tax Accountant
Since balancing the books is a complex and time consuming process, you may also benefit from seeking the advice of qualified tax accountant.