When you finally decide to take the leap and hang your own shingle, you want to be sure you're doing everything the right way out of the gate. Your bookkeeping is one of those functions that starting out with best practices is going to save you a lot of headaches later on. Here are 10 tips to keep your books in order.
- Determine the best type of business entity to conduct your business. The major choices include sole proprietorship, partnership, limited liability company LLC, corporation, and non profit.
- Apply for your Federal Tax ID number if you haven't already. Go here to apply online.
- Establish a separate bank account for your business. This will significantly reduce the time and money you spend on bookkeeping and allow you, at a glance, to track how much cash is going in and out of the business.
- Set up an accounting system that matches the complexity of your business. We recommend setting up QuickBooks. There are many flavors of QuickBooks for small business bookkeeping needs.
- Set up the forms you need to track transactions. For example, you'll need an invoice or receipt form at the very least. You might also want to set up purchase orders, estimates and statements. All of these forms are included in QuickBooks so you don't have to reinvent the wheel... You might need checks, too, from the bank.
- Check to make sure you have all of the business licenses you need. This usually includes city licenses and sales tax licenses. You might also need food and beverage licenses, environmental permits, health permits, building approvals, and more. Go to http://business.usa.gov/ to find out more.
- Secure business insurance to protect your financial investment.
- Create a realistic budget, and work within the budget as much as you can.
- Make estimated tax deposits throughout the year, especially if your type of entity is a sole proprietor, partnership or S-corp.
- Value your time. Spend as much time as possible on your core business and outsource accounting, administrative and legal experts and staff.
