Top Five Accounting Tips Your Business Needs to Know
As a business owner, before finding success, you can go through a few trial and errors. Researching and finding the best solutions can help minimize the amount of failures. Below are five ideas from the accounting perspective that can have a positive effect on your business.
Think of the Future Now
Do not be afraid to spend money on your business. I can’t stress the importance of not being short-sighted and trying to complete everything as minimal as possible. Spend money and time on setting up the right financial technology to help you analyze and grow your business. Make sure the structure of your business is correct from the start, so you don’t regret having to make a business decision you are not aware of. Understand your entity choice and make sure to account for it the correct way.
Protect Your Assets
As a business owner, protecting it against fraud must be a priority. The embezzling of funds from a trusted employee can happen to any company with the right formula of pressure, opportunity and rationalization. Take away the chance of fraud by knowing why an employee might be willing to commit a white-collar crime.
Don’t Mess With the Government
Pay your taxes. Nobody likes to do this, but we all know that taxes are as unavoidable as dying. Business owners need to take the financial responsibly of paying their taxes on time and in the correct manner. By doing neither of those, you greatly hurt the chance of your business being successful. Taxes do not go away, and the pressure of back taxes is the downfall of many.
Grow Your Business
Everyone has visions of growing a successful business, but this process can be delicate. Businesses can outgrow themselves if they aren’t careful with their cash. Keeping cash in the business should be a financial priority for the owner. You can do it successfully by analyzing the accounts receivable and accounts payable and knowing when to finance or take an investment. Knowing your financials and having an idea of how everything effects cash can greatly increase your chances of successfully growing your company.
Don't Leave Money Off the Table
Even though the government has an interest in you paying taxes, they also allow some favorable deductions and credits to help a company. Being aware of how items are expensed or credited can have a large effect on a company’s bottom line. Certain purchased assets can provide a full deduction instead of depreciating over a period time, which can have a positive effect on cash. If you are improving a product, processes or software of your business/industry, you could be eligible for a credit that will reduce your tax burden dollar for dollar. All these items can save you money if you know exactly what you are looking for and know how to use them properly.
In summary, knowledge is power and the more prepared you are for the financial aspect of your company, the best chances you will have to be successful.
Learn about other Accounting & Taxes resources in The Partnership’s Small Business Resources Hub or sign up for the Small Business Resources newsletter and stay connected for information about upcoming events, other resources and the latest announcements in the small business community in Greater Des Moines (DSM).
Jonathan is currently a manager at McGowen, Hurst, Clark & Smith, P.C. in the Business Advisory and Tax Services Department. He graduated from the University of Kansas with a Bachelor of Science in Accounting and a Master of Accounting in May 2011. Jonathan's area of expertise is small business accounting and taxation, along with consulting clients on their processes and procedures within their business. Jonathan is a member of the AICPA, CPAmerica International and the ISCPA. Jonathan is also a past graduate of the Kansas Society of CPAs "20 up to 40" Leadership Program.