Wondering what you need to consider when starting a business? From an accounting point of view, there are a few things that are all too often overlooked by those who are launching a new startup. In the excitement, stress and mild panic to get things up and running, it is not always easy to think about the small details, after all. To help you start your new venture on a note that will make it easier to grow financially, we have put together some of the most important things to consider when starting a business.
Simple Accounting Tips for Starting a Business
Make sure that your new venture hits the ground running for optimal success, with the help of our tips on starting a business.
1/ Separate your business and personal expenses.
It is best to set up a dedicated bank account for all of your business expenses so that you can separate them right from the start and keep a separate credit card with this account. This will make it a lot easier around tax season and also help your accountant keep your records on track more easily. Although it may seem like an extra chore now, it will save you many headaches down the line.
2/ Track every expense.
You should also get into the habit of keeping your business expenses and cash flow tracked properly. You may end up missing out on tax breaks if you do not keep careful records and track even the smallest of expenses. Label and clearly categorise each expense using accounting software or even a spreadsheet or manual folder if those work better for your needs. Get into the habit early and it will be easier to make this a regular part of your monthly routine.
3/ Determine how you’ll get paid.
How will you pay yourself? This is something you will need to start thinking about as early as possible. Many new business owners make the mistake of assuming that they can use whatever is left over each month as income. Although this technically works, it is far more effective to work out your income and plan in advance. Speak to your accountant in Durban for assistance on how to work out your payments.
4/ Develop a bookkeeping system.
Bookkeeping differs a little from accounting. Bookkeeping refers to the process of recording each financial transaction and organising your bank statements. Accounting services work on a higher level, focusing on the data that is collected and developing financial statements. You will need a bookkeeping system in place to keep track of your daily, weekly, monthly, and annual records. There are a few systems that you could choose, from hiring an outsourced or part-time bookkeeper to using software such as Quickbooks or Wave or even using a spreadsheet. As your business grows, you can then look at hiring an in-house accountant or bookkeeper to assist.
5/ Set up a payroll system.
Another thing you will need to think about if you plan to hire or outsource any labour is payroll. If you plan to stay a one-person-show for now, you will likely look at hiring freelance or part-time help to assist with anything you may need, whether it is a website design, logo, content for your website, social media services, photography or any other service that you may require. In South Africa, most freelance and outsourced work under a certain amount is exempt from labour tax. Some part-time work may require a small amount of tax, however. It is always best to speak to your accountant so that you understand exactly where your limitations are in this regard.
6/ Get your taxes in order.
On the topic of taxes, you will also need to think about your own taxes. Tax compliance is essential for any new business. There are a few options that you could consider, including standard income tax and provisional tax. Depending on whether you have any other businesses or you plan to register your company for VAT, or even if you plan to register a company as a separate entity, there are various tax options that may apply. It is always a good idea to get advice from a professional to make the choice that is best for your business.
7/ Hire a professional accountant.
Finally, even if you can only manage to get help for a few hours a month, a professional accountant in KZN will make all the difference. This will cut out on a lot of stress, allowing you to focus on growing your business without the added worry of paperwork and finances.
To find out more about working with a highly experienced, trusted accountant, contact MJ Accounting today for expert advice on starting your business with everything you need to succeed.