Although not a fun topic for many, accounting is a must-faced topic for every entrepreneur. It is a real struggle to face budgets, money, and receipts, but it is an essential step that can help you define and manage your business better. If you are serious about your business and want it to grow professionally, you need to acquire this service.
Beginners do not always know the basics of accounting services and all the vital steps they need to know about it. Luckily, this article will teach you about the most important things you need to prepare yourself, in line with this topic.
#1: Record Your Income and Expenses
When starting a business, you should know that your money comes and goes. To account for them properly, you need to track how much money goes in and out of your business. Many tools now exist to help you manage this task, such as Google Sheets, which is free and readily available. You can also utilise accounting-specific programs like Quickbooks to make it less complicated for you.
Keep all your original receipts with you as they are needed to be presented should the ATO decide to audit your paperwork. The best time to toss your receipts is when your statute of limitations on tax return reaches its expiration date.
#2: Have a Balance Sheet for Your Assets, Liabilities, and Equity
It is crucial that you also have a balance sheet. That document states your business' capital, assets, and liabilities.
Assets are the things of value that your company owns, such as products, computers, cash, etc. It is always equal to your liabilities and owner's equity.
Liabilities include the list of things your company owns, like loans or credit card debts.
Tracking all these would help you see where your business is currently standing.
#3: Use a Separate Company Bank and Credit Card Account
Tracking income and expenses is complicated already, especially if it is mixed with your personal finances. It would be best to start your business with a separate account for the incoming and outgoing money.
That way, you would not have difficulty separating and consolidating your expenses. Since your business money is different from your personal money, it would help you with a tax or legal issue you need to face.
#4: Prepare to Pay for Your Taxes
Having a business is not only about getting and enjoying the extra income. It also means you should pay your taxes. Sometimes, the tax you get is friendlier, especially if you are a beginner in the field, but as your income grows, your tax also increases. Make sure that you file your income tax return for your business on time and that you pay the necessary taxes.
Note: Having an accountant can help you find ways to lower your annual dues.
Conclusion
Accounting helps entrepreneurs keep track of everything they own, from the assets, income, liabilities, and cash flow. These may sound like overwhelming terms, but they are essential in keeping track of your business's financial performance. The more you understand how your business is going, the more you can make more informed decisions later.
You can always secure accountant services online to make your business beginnings more manageable instead of overwhelming. The Ecommerce Accountant was specifically designed to cater to business startups' needs. Book a free strategy session with us today, and we will show you how we can minimise your taxes and increase your business profit.