So you’ve started your own business – congratulations! While there might be some initial challenges, the process of starting your own company will be filled with great opportunities and exciting new adventures. With the right business strategies and financial decisions, there’s no limit to how far you can take your business.
As you get started with your small business, there are a number of things to prepare for. For starters, it is vital you have a sound financial strategy and key accounting systems in place. Here at Ferguson, Timar & Company, we’ve compiled a basic list of financial tips to help you make the most of your new business opportunities.
1. Start a Business Bank Account
LLCs, partnerships and corporations are legally required to have a separate business bank account. Even though sole proprietors are exempt from this rule, separating personal and company bank accounts is very much recommended. This strategy will help keep financial records (income, expenses, etc.) distinct, which will be important come tax time.
2. Keep Track of Expenses
Having a reliable expense-tracking system is vital. An organized system will track any business expense receipts, along with all deductible expenses to report on your tax returns. Here are a few important expenses to track:
- Business Meals and Entertainment
- Business Travel
- Vehicle-Related Expenses
- Receipts for Gifts
- Home Office Expenses
3. Establish a Bookkeeping System
Bookkeeping is the day-to-day process of recording and organizing transactions and reconciling bank statements. You can do your own bookkeeping with the help of software or by hiring an in-house bookkeeper/accountant. If neither of these are feasible options, consider outsourcing your company’s bookkeeping services to a professional accounting services provider like Ferguson, Timar & Company
4. Develop a Payroll System
Whether you have full-time in-house employees, part-time workers or 1099 contractors working on your behalf, it’s important to have a system in place for handling payroll. As the owner, you will want to determine how you will get paid from your business, so factor yourself into the payroll system as well.
5. Learn How to Calculate Gross Margins
Track the cost of goods sold (COGS) and your gross margin to determine how much your business actually gets in profit when products or services are purchased by customers. This is important to make sure your pricing structure is effective and you are receiving the desired return on investment (ROI) from sales.
6. Re-evaluate Again and Again
Track your results and use that information to re-evaluate your business on a regular basis. This is what accounting and financial strategies are all about. Make adjustments and alter systems as needed to refine your approach and get to the point where you want and need to be.
Owning a small business is equally rewarding as it is challenging. To ensure that your company has a strong foundation, it’s important to stay on top of its finances. For more information about small business accounting and bookkeeping, including outsourced services that will help your business grow, contact Ferguson, Timar & Company today.
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