Startup Accounting from a Non-Accountant
Being small in business doesn’t mean there aren’t some truly valuable resources out there just waiting to be taken advantage of. The world of taxes can be a particularly crazy situation to navigate, filled with complexities and unexpected twists. Knowing there are knowledgeable resources and experienced professionals available to help can be a priceless asset to have in your back pocket as you run your small business.
Accounting adventures can burden your adventure. As business owners we all want that burden free life with personal jets and Maserati's, free from excel sheets and accounting softwares, and/or meetings with the accounting people about spending habits.
Unfortunately many newbies are unaware of the burden tax time is when entering the business owner world. Three areas of fear in this are:
Do I have the required receipts?
Do I know a good accountant?
DO I HAVE ENOUGH MONEY TO COVER THE BURDEN?
Wait… I own a business, so why am I not rich yet? It's a question that many entrepreneurs find themselves asking at some point on their journey. Despite all the hard work, dedication, and countless hours spent building my brand, the financial rewards can sometimes feel elusive.
We have all asked these questions before. The best answers are learned through lessons learned, but do they have to be?
Pocket Advantage has the answers, well the answers from personal experience. Before we get to that experience let's dive into what the burden really is. Taxes vary from state to state and then there is the federal taxes, then there is the burden of doing business. I count these all taxes on my profits. The first is Gross Income, then Net Income, then tax burden/reserve.
Gross Income is everything that comes in to you bank account from business. Easy peasy. Do enjoy this number, it helps to see the gravity of your efforts coming back to you.
Net Income is the what you get to keep after paying the bills. Within that figure is the tax burden. However I like to treat business taxes as a separate entity for conversations like this.
To cut to the chase, if you are a micro-business or a small-business have your home tax preparer help you with the paperwork. Most professional preparers can handle this size of business preparation. If you are growing past the small-business category you really should have an business accountant and business lawyer you can go to.
To find a tax preparer and lawyer I've had great luck going to the local Chamber of Commerce to find the professionals I need. Business associates are also a great avenue to find professional AND reputable business solutions. The reason I choose these avenues is for one reason, those that participate in organizations like this seem to have a reputation to defend/prove that they are the best. That is important to me. I want to shoulder up to others like my business that are will to stand up and say "I AM the best practice" in a profession.
Listen to the lively chatter around you; you may just discover a professional who is absolutely perfect for teaming up with on your next exciting project.
There are a few other resources out there that have come in handy. See list below:
The Taxpayers Comprehensive Guide - Great resource to get your head into the game of taxes and your role in making sure you are target to save enough to pay that tax bill when it comes due.
The Next Economy MBA - Which redefines the business structure in a way that highlights the benefits to having a charitable mission to help counter the tax burden by gooding good. That's always nice.
Small Business Starter Kit - This kits has 4 priceless books in and soon to have more resources in it to help all of us small businesses handle the humdrum of the business world; the parts we didn't like in the first place.
After that prerequisite stuff, I’ve found that saving a 1/3 of any payment I receive goes to an untouchable account, and that’s my tax payment account. I’m not large enough yet to pay quarterly but will be at some point. Then I zero that account at the beginning of the next year. I suggest this for all businesses however your business needs will dictate your specific industry.