Small Business Accounting – Startup Decisions
Business Startup, Doing it all myself?
The tendency for many first-time business owners to adopt the “Do it all myself” attitude can lead to problems.
The motivation to keep overhead low is rooted in sound business decision making. Yet, not hiring a professional bookkeeper to keep track of income and expenses can spell disaster. The fact is, a new business owner has a lot of things to consider. Making sales and generating money is at the top of the list. Doing the bookwork to account for it all, too often finds its way to the bottom.
If you take a close look at the statistics for business failure, approximately one third of the reasons new businesses fail is rooted in poor business finances. Having an accounting plan in place prior to startup is an even better idea. However, once a new startup is up and running, keeping track of and allocating the business’s money must become a top priority.
Hiring a Bonafide Bean Counter
It’s called the “I don’t have to know everything” plan. Realizing that there are business processes you need help with, can be a freeing experience and allow for other professionals to play a part in the business’s success. One of the first places to start is hiring a “Bonafide Bean Counter”. Certainly, that would involve a bookkeeper, and if the business is more complex, or has a corporate structure then an accountant for sure.
Bookeeper Versus Accountant
Initially, keeping track of income and expenses, and establishing a record keeping system to handle the financial aspects of the business, can be accomplished by a professional bookkeeping service.
It may make sense to reach out to an accountant early in the process regarding tax planning, or if the structure of a business calls for more complex decision making, a qualified accountant is a great person from which to seek advice. As a business grows, and employees are added for payroll an accountant is going to be a money saving decision.
Business Startups Require Decisions
But it doesn’t end there. There are considerations to be made regarding which type of accounting method to use. Cash or accrual? And if you are in the beginning stages of forming your new entity, then you must decide which form does the business take? Will it become a partnership, a sole proprietorship, LLC, a C or S type corporation?
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