The entrepreneurial spirit of America is alive. Besides large corporations like Facebook and Google making an impact, there are so many small businesses opening up every day.
This past month, I’ve been lucky enough to help set up bookkeeping and accounting procedures for a couple of new business startups. Our firm helped these clients streamline workflow by setting up good systems. So now, I would like to share these methods with you. Here are some of the best bookkeeping tips for new business startups:
- ACCOUNTING METHOD – A must for any new business is to have an accounting method in place. An accounting method is the process a business uses to report all of its income and expenses. Some businesses use the cash method, which means you would report income in the same year that it’s made and expenses in the year you spent them. Other companies use the accrual method, which means you would report income and deduct expenses in the year that you earn and incur them.
- TAX OBLIGATIONS – There are two things we know in life, we all die and we all pay taxes. For new business owners, there are four types of taxes businesses may be required to pay, including: income tax, employment tax, self-employment tax and excise tax. You may also need to make estimated tax payments. If you have employees you will also have to set up a system to comply with payroll taxes.
- BUSINESS STRUCTURE – Choosing the correct business structure is a very important business and bookkeeping decision. There are many different types of business structures, including: Limited Liability Corporation, S Corporation, Sole Proprietorship, and Partnership. The type of structure you choose will determine how you file your yearly taxes.
- EMPLOYER IDENTIFICATION NUMBER – All businesses should apply for a Federal Tax Identification Number, also known as an EIN or Employer Identification Number. This is a number assigned to just your business for federal IRS tax purposes. You can apply for this number online atwww.irs.gov or give our DM Accounting team a call and we will help you.
- EMPLOYEE HEALTH CARE – Under the Affordable Health Care Act, many businesses must provide health care benefits to employees. The Small Business Health Care Tax Credit helps small businesses with less than 25 employees pay for health care coverage. The credit covers 50 percent of premiums paid by small business employers and 35 percent of premiums paid by small tax-exempt employers.
There are many things to think about when starting a new business. If accounting and bookkeeping are not your specialty, then why not give our expert team of bookkeepers a call or e-mail us to help you through the process.
As for our new clients, we wish them the best in their new adventures!
Have a fantastic week!