One of the more daunting tasks for a new entrepreneur is having to manage their company finances. For many people it’s just easier and more comfortable to rely on a bi-weekly paycheck with all the taxes, medical insurance and retirement taken out before they even see it. Most people new to being their own boss aren’t able to go out and hire an accountant, but managing the books yourself does not have to be a nerve-wracking experience if you know where to start. Here are a few key things to keep in mind:
A lot of things you buy to do your job may be tax deductible, and not just the big purchases like a new laptop or a desk. Small purchases like printer ink or even office supplies like pens and paper can really add up over time, and you might be surprised at the end of the year to see how much you spend on all of it. Basic accounting software can help you keep track of things, but most charge a monthly subscription fee and limit the number of transactions you can record per month depending on how much you pay (That fee counts as an expense too!) The cheap and easy way to do it is buy a folder and put every receipt in it for the year. If you buy something online, print your e-mail confirmation and file it away.
Depending on your revenue sources, you might be required to pay estimated taxes on a quarterly basis rather than once in April. The IRS offers detailed instructions and requisites on their website. Make sure you’re following the steps necessary for your situation to avoid paying unnecessary fines or getting a huge tax bill at the end of the year.
Figure out how much you need to get by month-to-month and stick to it. Don’t let the money you plan to put back into your business go towards your weekend fun. Whatever funds your set aside for yourself, keep everything else in a separate account so you don’t accidentally spend it on a new iPhone.
Make a point to double check your records on a regular basis. It may not be fun but by making it part of your routine you reduce the chances of something slipping through the cracks