Business is tricky with all of the regulations and legal obligations.
Here’s a few things your business can do to start off right!
Start Up Costs
Start up costs can doom the accounting for small businesses. Often times new entrepreneurs start companies without allocating the costs of business correctly.
When a new business has formed the costs of starting that business should not be immediately expensed.
The correct approach is to assign the costs an asset account and amortize (a process similar to depreciation) the costs of starting up.
Corporations are expensive to maintain, to start, to close. Remember to do your research before incorporating your business.
The formation costs and annual state taxes are different in every single state and require due diligence over word of mouth.
For example, California corporations are required to pay the state $800 annually regardless of gross sales. Sometimes this is a law that is overlooked and will result in business hardship
Bookkeeping is essential to maintaining the integrity of a start-up company.
Bookkeeping is tedious, time-consuming, and annoying. However, excellent accounting represents the financial integrity of every business.
The IRS, EDD, SOS all require thorough accounting to settle any dispute over tax liability.
Financiers need accurate accounting when issuing loans or lines of credit.
Take this opportunity to reflect on your businesses accounting situation.