How to Start Your Own Bookkeeping Business: Essential Tips

AI has dominated headlines throughout the year, with organizations across a variety of industries experimenting with the technology. While an extension to file applies to submitting your tax forms, it does not give you an extension on paying. This means you’ll need to keep up with your estimated https://www.bookstime.com/ tax payments during this period. If you can’t keep up with tax payments, reach out to the IRS to see if you can arrange a payment plan. Knowing the common small business deductions and credits that may apply to your business is an important step in preparing your business taxes.

The information from a company’s balance sheet and income statement gives the accountant, at the end of the year, a full financial picture of the firm’s bookkeeping transactions in the accounting journal. Bookkeeping in a business firm is an important, but preliminary, function to the actual accounting function. Bookkeeping requires knowledge of accounting and builds your financial foundation. It requires a thorough bookkeeping understanding of accounting principles and financial statements to provide accurate information about the financial health of your business. By investing in your bookkeeping, you’re ensuring that you have a strong financial foundation to base your important business decisions from. If you’re like most modern business owners, odds are you didn’t become one so that you could practice professional-level bookkeeping.

FAQs on Small Business Bookkeeping

Accounts Payable is an expense account that lets you know how much money you owe to your creditors. Rent, business insurance, and software subscriptions are expenses you pay before receiving the benefit of the service—these are prepaid expenses. As a business owner, you’ll most likely have to create a complete financial report at least once a year, for tax purposes. However, there are plenty of reasons to make quarterly, or monthly financial statements as well. Frequent financial reports are a great way to check on your budget, and figure out where you can make adjustments if necessary. Intuit QuickBooks’ Simple Start plan is our top choice for businesses that are service-based — think professionals and businesses that don’t need to track inventory or manage product sales.

Accounting software can also prevent costly bookkeeping mistakes and can also work in tandem with payroll software. Once you’ve settled on a business name, you’ll need to register your business in the state in which you will do business. This is generated by looking at your assets and what you own versus your liabilities and outstanding debts. It can help determine if your business is taking on too much debt to support its revenue.

The Trusted Partner for Your Business

It lets you know how you’re doing with cash flow and how your business is doing overall. Staying on top of your bookkeeping is important so that you don’t have unexpected realizations about account balances and expenses. We’ve put together this guide to help you understand the basics of small business bookkeeping.