While as a solopreneur your to-do list is never ending, we wanted to help you break down, in a step by step way, what you can do to save yourself time and headaches later. By organizing your small business accounting list into manageable parts, you’re showing that list (and the world) who’s boss. And in this case, it’s you. Successful start-up accounting can be as easy as you make it, but you have to start somewhere. Let us point you in the right direction:
Before you get started:
- Open a bank account – Having a separate bank account makes life easier come tax time, and helps you manage your expenses in one specific place. Not to mention, if you’re not a sole proprietor, you’re legally obligated to have a business account. Shop around to find the bank that works for you, and pay special attention to required fees.
- Choose a software – Tackle your accounting from the get-go. Since you’re in this to ultimately make money and get paid, know how you’re going to do that from day one. Setting up your bookkeeping will make invoicing a breeze and will help keep track of all of your expenses. Choose one of our favorite bookkeeping tools or one of your own.
- Get a partner – Realize that you can’t do this alone (and don’t want to). Add a partner whether that is a team member, a bookkeeper, or just someone you can talk to (i.e. your bestie will do just fine). You’ll want someone in your dugout ready to step up to the plate for you at any time, even if it’s just to be a shoulder to lean on.
- Check bank accounts (i.e. show yourself the money) – Start each day by reviewing your bank accounts. Money is what makes your business flow, and you never want to come up short (or empty) handed. Make a plan for any upcoming expenses, and keep in mind any revenue that will be received, too. Keeping a close eye on your accounts is not only smart, but good for your business health. Think of it as your daily kale smoothie.
- Track your expenses – Like we’ve recommended before, it’s a good idea to log your expenses…and often. While days can get busy, don’t let weeks get ahead of you. Set aside a time once per week to reconcile your receipts and store them properly. If that’s a shoebox, great, but realize there are other options out there like Wave Receipts to store expenses digitally.
- Prepare and send invoices – Keep track of your weekly invoicing and determine a payment schedule. If you’re a consulting or service based company, be diligent about recording your time on the clock, and be sure also to include payment terms somewhere on your invoice to ensure timely payment.
- Determine your tax obligations – Taxes can be a big, scary world for small business owners. Talk with your CPA and decide which method of paying taxes works best for your business(quarterly or annually). We also offer a ton of advice on this very topic on our blog. If you’re paying quarterly, use the last week of the month to get organized. It will make the end of each quarter a breeze.
- Review your profit & loss – Your profit and loss will tell you how much money you’ve made versus how much you’ve spent. If you’ve been keeping up with your weekly expenses, reviewing profit and loss at the end of the month should be a piece of cake. Use the summary to make changes and allow it to guide business decisions when necessary.
- Report your tax – If you have employees, make sure that you’ve reported their annual earnings (W-2), and if you’ve hired any independent contractors, check for their 1099. Next, work with your accountant to review your yearly reports and sign your return. Use this as an opportunity to review all of your accounting and bookkeeping for the year and make any necessary changes which brings us to our next point…
- Reflect and re-evaluate – No small business can be successful without reflection. Reflect on what worked and what didn’t, whether that means re-evaluating products that were a bust, or determining clients that are no longers a good fit. Remember, it’s important to see where you’ve been and where you’re going. Use the end of year (or even the end of tax season) to reestablish goals and work back through each of the steps listed here. Think of it as a fresh financial start. Remember that daily kale smoothie? Think of reflection as your eight glasses of water; drink it regularly and often.