When you start a small business, your initial energy will be focused on translating your product into a profitable venture. In that setting, some view bookkeeping systems, including those for business tax reporting and filing, as a low priority. While that is understandable, it is not wise, since inadequate bookkeeping could be costly - in terms of time and money - in the long run.
A formal process is an absolute requirement, particularly if there are multiple clients and purchases, and perhaps even subcontractors. At that point, most people seek help, or take a course or two in bookkeeping. It gets rather complicated, and becomes time consuming. If you find the idea of keeping your own books boring or intimidating, then you can contract our bookkeeping services. A good service can keep you from making mistakes that invite audit by the IRS.
Decide on A Structure
Before you start your business, view our page on incorporating in New Mexico. There we discuss the relative merits between sole proprietorships, partnerships, limited liability companies , and corporations. Your structure affects your bookkeeping, including how you account for your business's revenue and costs and your tax reporting. It also can affect your personal exposure with regard to business liabilities. If in doubt, consult your business attorney and/or accountant about which structure is best for your business and why.
Keep Your Books Current
Accurate and up-to-date bookkeeping is necessary for a successful business. Therefore, even if you dread this chore, set aside time to update your business's books on a regular basis, perhaps once a week... or have us do it! Our book keeping service pairs well with our virtual office service. You can have your paperwork sent to us for sorting and handling. Get Professional Help
Whatever business structure you choose, but especially if your business will be a corporation, talk to your accountant. Find out what records you need to keep and what expenses are deductible. You may use our book keeping services, or maintain your own books with a service like Quicken. Also discuss whether you should pay yourself a salary and, if so, how much it should be. This can be an important issue, because, in some cases, the IRS may construe not taking a salary as a way to avoid payroll taxes. In addition, your accountant can explain what tax payments and filings your business will have to make.
Open a Bank Account
Having a separate bank account for your business is essential because mingling business and personal income and expenses can cause confusion and result in costly errors in your tax reporting. Learn about opening a bank account here and obtain your EIN here.
Take Taxes Seriously
Many new businesses run into financial trouble because they don't understand their tax filing responsibilities. This is understandable; not only may your business have to pay federal income, payroll and unemployment taxes, but it will probably be responsible for state and local income taxes and state unemployment taxes, may have to pay state sales taxes and disability taxes, and perhaps will be liable for other state or local business taxes and fees.
Whether you or your accountant handle the tax filings for your business, we can provide the necessary book keeping services on a timely basis. As daunting as the tax system may seem, once you understand your tax liabilities and are registered online, the actual filing process often is relatively quick and easy.
Preparing proper financial reports is imperative. They act as your financial dashboard and should drive decision making. Even with this importance, though, proper book keeping can often fall to the way side. For this reason we provide a number of resource articles, along with book keeping and accounting services.