Starting a small business isn’t for the faint of heart. Think of it as a huge jigsaw puzzle that each piece needs to be put perfectly in place in order to have a successful startup. What happens if there’s a few missing pieces? If those missing pieces fall into your business’s accounting, your startup will be shaky. Here’s the Accounting 101 information you need to have:
1. What is your business structure? You need to choose the best small business ownership structure for you. Many small businesses choose the simplest of legal structures, the sole proprietorship, but there are more to choose from. Your choices include partnership, limited partnership, limited liability company (LLC), or an S-corp. Knowing which to choose can be confusing, so you might want to talk to an accountant or, at the very least, do some research so you understand the basics.
2. Filing deadlines are different for small businesses than for individuals. We all know the April 15th deadline for personal tax returns, but corporate and business returns are due in March. This mistake could cost you extra fees and penalties for filing late.
3. You’ll need an EIN (employer identification number) to file your taxes and to be recognized by the state. How do you get one? By registering your business with your state. You should be able to find this information at your state’s web site.
4. Don’t forget to get business insurance when you’re tallying up those business expenses. Whatever risks are associated with your business, you need to get the proper small business insurance to protect you AND your new business.
5. Choose your accounting system and software. Even if you plan on having an accountant, you still need to have a basic understanding of your business’s finances. Again, if you have any questions, you should talk to an accountant to help you choose correctly.
6. Are you hiring an accountant and/or bookkeeper? If so, there’s no reason to wait. A financial professional will be able to assist you in all accounting aspects of starting your small business.
The above is not meant to be an all-inclusive list, but rather a starting point of the necessities you shouldn’t forget to take care of. Your small business startup will go much smoother, and be much more successful, if you’ve dealt with the above accounting issues.
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