Young Upstarts

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Eight Accounting Tips For The Aspiring Entrepreneur

By Mark James, Crunch

Behind every successful entrepreneur is an excellent accountant – a natural number cruncher carrying a passion for payroll. With their assorted accountancy knowledge they help keep businesses afloat, but unfortunately like everything in life their expertise comes at price.

As such, as an aspiring entrepreneur you’re probably struggling to afford one, their yearly or monthly fees impacting significantly on your cash flow.

You needn’t fret just yet though as there’s a lot you can do yourself, and some tips of the trade folk like me can provide you with should you a need a helping hand. So, without further ado, here’s eight accounting tips to help you on your way…

Organize everything.

Part of the path to building healthy balance sheets is excellent organisation, keeping track of your financial paperwork key to avoiding accountancy aggravation.

With this in mind try to establish an organised system, filing away every facet of your business finances separately. Invoices, bank statements, receipts – anything your business throws up, ensure that you organise it diligently and everything else will be made simpler. 

Keep your accounts separate.

As well as separating your paperwork and establishing a sophisticated system there, ensure that you keep your bank accounts separated, too.

From the outset of your entrepreneurial endeavors have a bank account that’s specifically for business. This will ensure that you’ve got a clear picture of your business finances and should help limit accounting confusion.

Establish an understanding of tax facts.

Tax is taxing and tricky to keep on top of, but unfortunately it’s intrinsic to the entire accounting process.

Thankfully, it’s now relatively easy to get up to speed with some of the basics though, collectors like the IRS offering ‘tax workshops’ and ’webinars’. Using these, you ought to avoid fines and get those taxes paid on time.

And learn your legalese, too.

Elsewhere, it’s important to learn a little on the law side of things, too – like the different legal structures and how they’ll impact on your accounting.

The taxes Sole Proprietorships pay will differ slightly from their incorporated counterparts, so it’s integral to get to grips with your business structure and what it means on the tax front. Again national collectors are actually quite helpful here, America’s IRS offering advice for those based in the states. If based outside of America see if your tax collector offers the same.

Get techy.

There’s an array of apps and software packages that can make accounting relatively simple, so set about exploring these and see what they can offer you.

Online accounting packages are often simplistic (especially in comparison to the pad and paper method) as they provide a slick and tidy platform from which to do all your accounting rigmarole. Elsewhere, creations like Receipt Bank mean that you can avoid keeping masses of receipts, getting techy with your accountancy making things infinitely easier.

Build knowledge of the basics.

At its core, accountancy exists to help businesses make better financial decisions and ensure that they avoid mistakes that can effectively cripple their business.

To help them in this endeavour accountants use a range of tools – balance sheets, cash flow forecasting, profit and loss accounts and the like. Getting to grips with these you’ll gain a better knowledge of your business and you ought to avoid financial catastrophes that can come from bad accounting.

… but when you can afford it, bring in a pro.

Whilst you can take some aspects of accountancy into your own hands really there’s nothing better than bringing in an expert.  

Although involving an initial outlay a good accountant will save you money, their assorted tax expertise ensuring that you’re trading tax efficiently and their business and accounting knowledge proving invaluable, ultimately.     

And finally, never neglect it.

You can invest all you like in an excellent accountant but their expertise will mean little without a little help from you, so ensure that you find the time to do your bit, too.

Amongst all the rest of your everyday entrepreneurialism find the time to do some bookkeeping – perhaps fifteen minutes to half an hour depending on the time you have available. Doing this you’ll spare yourself from grief come tax return time and you’ll have a clearer picture of the state of your business finances.

 

Mark James currently works for online accountancy firm Crunch and their sister site Go Limited, which provides an incorporation service for UK businesses.

 

 

 


This is an article contributed to Young Upstarts and published or republished here with permission. All rights of this work belong to the authors named in the article above.

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  • Richard Yaffee

    Great tips Mark, I have learned as well to do it as you go and don’t leave it all to the last minute when the accountant needs everything NOW!

    http://ctssac.com/

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  • RightPhase

    I am not sure about this information yet. There are a couple different takes on it. In general its good to keep in mind and may even be ideal but then again if a person was this organized and on top of it, they probably wouldn’t be an entrepreneur dumping all their time into innovating something they are passionate about. As an entrepreneur sometimes I feel like, if a project brings in a lump of money large enough for the IRS to be concerned than that’s a good problem to have and the resources are there to hire the experts and allow them to do what they are passionate about, but if a project never amounts to anything than worry about the organization of it and keeping track of all details can really slow down the innovative process and perhaps keep you from allowing it to become something the IRS now wants to tax. Like I said there are different takes, there are different entrepreneurs as well and different business that this article is referring to, so, in general it is good stuff to keep in mind.