Show Me the Money - And Manage it Correctly
For many new entrepreneurs, accounting is often a foreign language peppered with four-letter words. Fortunately, it doesn't have to be this way. The key to managing the money your business makes is getting your accounting system off to a good start and finding professionals you trust to help you successfully manage the income your new venture is generating.
Setting Up Your Accounting
Becoming an insurance agent or starting another business won't require you to earn your accounting degree, but you should learn some basic accounting terms. The Small Business Administration's website has plenty of information to get you started. Once you understand the basics you'll need to keep track of, choose an accounting software package to help you do it. You don't need an expensive package with fancy features. Just look for something that will walk you through the process and generate basic reports. Schedule time to take care of your accounting tasks and perform them religiously. It s a good idea to perform accounting tasks weekly or biweekly - mistakes happen, and it is easier to find them in smaller amounts of data.
Managing Company Income
You'll need a place to put the income your company generates, so establish a checking account for your business. It is also helpful to have a business credit card. Never deposit company income into your personal account or pay company expenses with your personal credit card. Keeping everything separate simplifies your accounting and helps protect you if you are ever audited. Get an interest-bearing checking account if you can and shop around for the best deals - business accounts have very different fee schedules than personal accounts. Make sure you understand all of the bank fees related to your account.
Taxes
The solution for taxes is simple: hire a pro. Whether you go with a CPA, accredited tax preparer or an accredited tax accountant, find someone in the know. Get recommendations from fellow business owners or your attorney, and look for someone who specializes in small business taxes. Reach out to several tax pros and talk to all of them. Ask them about their experience and how they keep up-to-date with current tax laws. Find someone whose personality and work methods fit with yours. You may want to work with someone who prefers face to face meetings or someone familiar with the accounting software you chose. While you shouldn't pay more than what is fair, tax services are an area you shouldn't bargain shop.
Properly managing your business finances isn't difficult and is a chore you don't have to shoulder alone, so don't let taxes and scary accounting language deter you from chasing your entrepreneurial dreams. There are plenty of practicing accounting professionals who can make the numbers work while you focus on the work you love to do.
