When starting your new business there are several important decisions you will have to make. This includes your business type, your customer base, location, marketing strategy, staff hirings, and so on. However, despite hard work and dedication, 30% of new businesses fail within the first two years of opening. A key reason for this is lack of proper accounting management and tax compliance.
Many startups prepare their own taxes and do not hire an outside accountant. For a very small business, this may work for a period of time, however, as a business grows more problems will arise. Business tax laws are very complex and should only be addressed by a professional. This assures your taxes are properly prepared and you avoid any legal concerns or fines. Good bookkeeping should not be overlooked, this is an additional service your CPA can provide. Here are four things to consider as you begin your new venture:
- Track Expenses: many businesses fail simply due to bad bookkeeping habits. Expenses are not carefully tracked, earnings are not recorded correctly, and simple bad math has done a great deal of damage to many businesses. A professional CPA keeps your earnings and expenses properly recorded. In addition, a professional bookkeeper can also help with other important factors such as payroll, depreciation of business assets and other key business activities.
- Proper Tax Preparation: businesses require yearly tax filings however, this can be quite complicated. Factors such as how the business is established (for example, sole proprietorship versus partnership versus LLC vs. corporation) effect what paperwork has to be filled. This also affects how your startup’s earnings have to be reported on your own personal tax return. A pass-through business is radically different than a corporation in terms of what constitutes the proper paperwork.
- Payroll: payroll can be one of the most important bookkeeping tasks of any business. If you have employees, taxes (both federal and state if applicable), Medicare, and Social Security all have to be withheld. Even if your business is a sole proprietorship and you are the only employee proper estimated taxes have to be paid.
- General Legal Concerns: another area where new businesses can run into difficulties is in general legal paperwork. Proper state licensing, acquiring an ID for both federal and state tax filing, and responding to requests for more information from governmental agencies are all areas where you need an experienced accounting professional.
Final Thoughts
Your startup will face the same challenges that any new business faces when first opening. An important part of your future success is being properly organized. A professional CPA can assist in your bookkeeping and tax filing needs. Fricke & Associates, LLC is well aware of the challenges new businesses face and offer services specifically designed to help a new business succeed.