Get Accounting Software and Set-up Accounts With Accountant
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With the current accounting software on the market, it is very easy to keep your own books. I recommend finding an accountant early in the process is that they can help you establish the books in a way that will reduce the time they need later to do your taxes. If you will be hiring some one to assist you, verify if they have any recommendations for software before you buy.
While you may elect to keep your own books and even do your own taxes, knowing the basics up front will help. I highly recommend finding someone to work with you to do this and pay them to do your taxes at least the first year to alert you to issues that might be specific to your business/location.
Quickbooks is very easy to use and will handle almost any aspect of managing the books for a small business. This will include keeping a check book balance, writing the checks (you can order pre-printed checks that feed easily in your laser printer. I found them cheaper through specialty printers than through Intuit, the maker of Quickbooks.
You can also create nice invoices and track account receivables (what is owed to you and how long the invoice has been outstanding). You can also enter bills when you receive them and then track based on due date when to write the checks. It is easy to balance your books once a month using your bank statement.
I would recommend having a bookkeeper or accountant assist you when you first set up your software. You will need to decide if you business will be cash or accrual based. Cash is easiest and what we use. You basically recognize payments when they are paid or received, not when they are incurred.
We set-up our fiscal year to be the same as the calendar year and this keeps things very easy and clean for reporting. At any point, we can run a nice Profit and Loss (P&L) report which shows income and expense by category. We can also print a Balance Sheet which shows the value of various accounts.
We set-up our expenses (you can always add them later) based on where we expected to spend money. While the tax form you file at the end of the year as some expense categories, you can create more and then you or your accountant can roll up the expenses into the standard ones on the tax form.
For types of revenue, it is up to you how specific you want to be when you track your revenue. If you receive payments in smaller amounts (such as many little web buyers or a retail store that sells many products), you can decide to record your income as a total collected for various products or services, rather than entering each transaction separately.
To learn more about Quickbooks Basic and Pro versions and pricing, click here.
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