Accounting Essentials for New Businesses

Starting your own business is no easy feat, as many business owners are responsible for managing every aspect of their business, from answering the phones to handling finances. Your plate is full! The best way to become comfortable in your new role as a business owner is to start with the basics. Keep reading to learn what accounting essentials you should know as a new business owner!

Set up a System

The first step to get your accounting in order is to set up a structured system that works for you. Having a specific process to follow when managing the financial aspects of your business makes it much easier to establish a routine. Research different software to find out which one is right for you, set up your charts and accounts, and begin recording your transactions, invoices, and revenue. Create a system where you perform the same actions every day, week, or month. Ensure that your system is set up for long-term use and will be easy to maintain over time.

Develop Cash Flow Management

Develop a cash flow management strategy as soon as possible. This is the key to maintaining your business’s financial health and staying on track. Keep an eye on outstanding invoices so you know how much money you are owed and from whom. Establish a savings plan for unexpected expenses and create a cycle for managing your payments. When your cash flow is developed and positive, there is money being moved in and out of your business, which is a good thing. Having a negative cash flow means you have more money going out than coming in, which is not a profitable situation. A positive cash flow means that you can grow your business and maintain success even in slower times. To manage cash flow, pay close attention to cash coming in and going out, track growth and make predictions, control expenses, and follow up on money owed to you.

Plan for Taxes

For many business owners, tax season can be a stressful, challenging, and overwhelming experience. To avoid these frustrations, it is essential to be proactive and plan for tax season in advance. Set aside cash specifically for taxes so that you are prepared when payments are due. Know which taxes apply to you, understand the tax laws, and be aware of any changes. Stay on top of the deadlines. Being well-prepared for tax season and having all the necessary records and receipts readily available will save you plenty of time and money in the long run.

Keep Records and Stay Organized

A key factor in good accounting is being organized. Maintaining accurate and up-to-date records can significantly ease your life, and staying organized is the first step. Make it a habit to record all transactions and reconcile accounts regularly. Staying on top of your business’s financials helps avoid errors and provides reliable information, enabling you to make informed financial decisions. Additionally, the more organized you are, the faster you will be able to complete your accounting.

Annual Tasks

There are several tasks you should consider doing annually to help you stay organized. Review your past-due receivables, review your inventory, complete any necessary tax forms, and analyze your financial reports for the entire year. Having accurate lists and information to refer back to helps in the future and can help you avoid penalties, fees, and interest.

As you begin your business, becoming familiar with the various aspects of accounting and financial management is crucial. Warren Accounting Group can help you determine the best way to get started and help you manage your financial tasks with ease. Our team is committed to helping you grow your business, one step at a time. From first-time business owners to seasoned entrepreneurs, our services are tailored to fit your specific needs. Contact us today to learn how we can assist you, 252-827-5259.