If you are a small business owner or an aspiring one, you know how hard it is to get your business afoot. But what comes after that is no less than a nightmare. Accounting. If the word accounting causes you to break out in a cold sweat, fret not. This blog will help you understand the basics of how to start accounting for your business. The best practice is visiting the best business accountants near me to determine the steps.
Step-1: Open a separate bank account
Even though it is not necessary, it is recommended to have a separate bank account, solely for your business to keep the records separate and plan the taxes.
Step-2: Track your expenses
Keep your receipts organised in a specific manner. Keep the records of deductible expenses and file your tax returns accordingly. This is a crucial step to monitor the financial condition of the company. It can be done using software as well.
Step-3: Construct a bookkeeping system
Bookkeeping is the daily task of keeping the records of transactions then categorizing them, and obtaining bank statements. You can either get your bookkeeping outsourced to accountants near me small business or keep an in-house bookkeeper. You can use special accounting software for this purpose as well.
Step-4: Set up a payroll system
You need to set up a distinction between a regular employee and a contractor. For employees you need to ensure that you are implementing the correct taxes.
Step-5: Determine your taxes
Tax structure depends on the structure of your business. For example, corporations and their owners are separate tax entities but in case of sole proprietorship, your personal tax can be classified as the business income.
Step-6: Calculate gross margins
It’s important to calculate the gross margins of your business to determine the methods needed to keep it afloat.