If you’re a solo entrepreneur setting up your own small business for the first time, it can be easy to get bogged down in the details and specifics that can slow down the momentum you have before you even really begin. By following these steps for business accounting and tax setup, you can start your business on the path to success and get yourself on track with minimal stress.
Open a Bank Account for Your Business
As soon as your business is registered as a corporation or LLC, your next step is to go ahead and open up a bank account for your business. Legally, both corporations and LLCs must manage all income and business transactions in separate accounts for their business. If you are sole proprietor, you have the ability to mix your business finances in with your personal bank account, but that can become tricky, confusing, and very complicated, especially when tax time rolls around.
By keeping your business bank account and all business income, expenses, and transactions out of your personal account, you’ll be able to get a much clearer picture of your businesses’ financial state at all times.
Keep Track of All of Business Expenses
The best way to create a solid accounting foundation for your business is to keep track of all of your expenses, even at the very beginning. By starting the habit of tracking all of your expenses early on, you’ll never have to worry about finding important documents like receipts, and you’ll be able to better manage your finances and understand your business’ financial standing at all times. Having solid bookkeeping and expense tracking from day one will allow you to monitor your business’ growth, create financial statements for clients and accountants and tax professionals, and track your deductible expenses.
Hang on To Your Receipts
When tax time rolls around, you may find that the IRS can be very particular about entrepreneurs who claim personal travel and other expenses as business expenses. Holding onto your receipts is a way for you to have a paper trail that you can show in case of any write-off difficulties.
If you have a business dinner with a client in a restaurant, you should save your receipt and document who attended the meal and what the purpose of the dinner meeting was. If you go out of town on a business trip, make sure to keep your receipts and document it well. Keep receipts for any office expenses like supplies.
Understand Your Tax Obligations
If you have a sole proprietorship, LLC, or partnership, you fall under the self-employed category and you’ll be able to claim business income on your personal tax return. You should, however, withhold taxes from your regular income. The taxes you withhold should be remitted to the government, as they normally would be if you weren’t self employed.
Hire Top-Notch Accountants and Bookkeepers
When you’re an entrepreneur starting your own small business, you’re busy enough keeping things running day-to-day. Financial professionals like accountants and bookkeepers can provide you with excellent financial advice, growth tracking, creating statements, organizing expenses, and more. Hiring a CPA can also be a smart investment as a solopreneur, as CPAs are legally able to prepare an audited financial statement for your business. Other experts you may consider hiring include tax planners and tax preparers.
Make Solopreneur Business Setup Easier with Sorge CPA
If you’re looking for business accounting, bookkeeping, tax management, business consulting, or CPA services, look no further than Sorge CPA. Sorge CPA is a different kind of accounting firm, made great by our exceptional talent. We are fueled by the entrepreneurial spirit and driven to serve our community, and our industry, with conviction and vision. Give us a call today to get started!