Accounting

Accounting

Accounting is a very important part of running a business that trips up many entrepreneurs. It is important to get an accountant and do that early in the business planning stages.

Requirements

If audited by the IRS you need records to prove:

  • Income
  • Deductions
  • Profit or loss for each year

We cannot provide an exhaustive list so make sure to check with your accountant

More Record Keeping

  • Daily transaction records: Keep 7 years
    • Cancelled checks
    • Invoices
    • Purchase orders
    • Etc. (we can’t provide an exhaustive list)
  • Keep payroll records: Forever
  • Original Tax Returns: Forever

We cannot provide an exhaustive list so make sure to check with your accountant

  1. Use a good filing system from the beginning
  2. Find an accountant early
    • If you do not pick an accountant early you will lose a majority of your income and have a good chance of being audited
    • Finding a good accountant
      • Google search methods on finding a good accountant
      • Interview at least 3 accountants
      • Do not pick the first accountant you interview
  3. Keep all receipts
    1. The CC history is not sufficient enough.
    2. Scan in receipts because most newer receipts are printed using cheap ink and it will wear away even if you keep them stashed in a box somewhere.
    3. Keep the original receipts after you scan them in.
  4. If running a large business you should get an accountant or accountant firm to audit the work from your first accountant. This method has been utilized after the Enron situation happened. This is helpful because people will tend to be very vigilant to find errors with their competitors work.

When to Get an Accountant

You will want to looking for an accountant as soon as you realize you will need to file taxes at some point because you are currently earning money. Why do you want an accountant? You want to get an accountant because they know all the tax information and can get you many more deductions and they know what they are doing. They are specialized in accounting so they are going to know how to do it better than you the business owner because you are busy doing other things and are not specialized in accounting. They keep up to date with laws and such in which you will not have the time for. It is important to let some things go to those who are specialized in their area.

Frequency

You will keep your own books with the receipts and suchand you only need your accountant once in a while. It depends on when you file your taxes. Try keeping good books so that you will not get audited and also so your accountant can actually do the accounting work well.

Software

  • QuickBooks: Quickbooks is good for most people as it is not super hard to learn. If you are not very interested in accounting this is the software to use.
  • Peachtree: Peach Trees is powerful and isn’t necessarily needed. If you like accounting you use this software.

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