Orlando King’s Accounting Tips For Entrepreneurs
According to statistics, about half of all companies will close in their first five years of operation and one of the most common reasons for closure is mismanagement of funds and running out of money.
After running several businesses in Atlanta, Orlando King learned that instead of malicious scams or extremely low sales, it is the minor accounting errors that come with the passage of time that usually leads to a financial crisis.
Most business owners are not good at accounting and most new businesses do not have the resources to have a dedicated accounting team, so mistakes can be made, but remembering these five accounting tips for entrepreneurs will help you to keep expenses minimal and keep your business growing for years to come.
Orlando King shares 5 accounting tips for entrepreneurs that will help them get started.
1) Open a Business Account
One of the first things you need to do when starting a new business is to open a special corporate bank account.
While it may seem more convenient to trade through a personal bank account when you are expanding your business for the first time, this can lead to serious tax return conflicts and can affect your assets. Leave your staff at risk if your business goes financially or legally. problem.
It is also important to ensure that companies and private finances are completely separate.
2) Prepare for Taxes Early
If you have experience automatically deducting taxes from your payroll and tax returns, the world of corporate and self-employment taxes can be extremely important.
One of the main differences between W2 (employee) and self-employed taxes is that instead of filing at the end of the year, self-employed people are subject to an estimated quarterly tax, based on their estimated net income for the year.
3) Save for Big Expenses and Emergencies
As your business grows, your business expenses will rise too. You can update your software to better manage users, upgrade your hardware, or expand your product portfolio.
You should also plan for the worst-case scenario, such as a natural disaster, an infectious disease, or even a family crisis that could cause your business to shut down for weeks or even months.
Most financial advisers recommend keeping a minimum of three to six months on savings. It should be easy to get liquid money in a security account for a company, so you can use it without any worries if your business goes into disaster.
4) Keep Every Receipt
Keeping track of every transaction you make or receive is one of the most important things you can do to protect your business finances. Having all your receipts can help you get the right withholding tax and save even more after the tax period ends.
They are also important to keep in mind when tracking your business, to prove that the deductions are valid.
5) Find the Right Software
If you're still using spreadsheets for accounting, you're missing out on the necessary tools that can promote your account and save time and money for your business.
Software packages are designed to make your business financially easier and even help newcomers to the financial world to make their business more profitable and get out of financial or legal trouble.
So these are 5 major accounting tips for entrepreneurs, it will definitely help you to grow your business if you implemented them correctly.