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Taxes & Record-Keeping
Bookkeeping in small business is not usually complex, but for some reason, the thought of
recording transactions and reviewing financial statements strikes fear in new business own-
ers. The truth of the matter is that as a business owner, you should be focused on selling the
product or service you are offering, networking, and making the contacts every successful
business does. Accounting is a detail-oriented and sometimes time-consuming process to
ensure all company transactions are being recorded properly. For this, hiring a bookkeeper
or accountant is usually advised for small businesses that can afford the usual hundred dol-
lars a month most small-business accountants will charge for basic services.
The bottom line is that you want to stay out of trouble with the IRS and off their radar by
providing complete, timely, and accurate taxes and records. Since this is not my forte, I
leave it up to the professionals.
Accounting, by far, is one of the most important aspects of starting up and operating a busi-
ness. It's so easy to get caught up in the more glamorous startup tasks of designing your
website or choosing a business name, yet without a solid understanding of the numbers you
will not survive.
Far too many business owners are overwhelmed with the accounting piece of a business
because for most entrepreneurs this is not their area of expertise. There is the choice of im-
mediately hiring a trained professional to maintain the company topics, but even if you do
so there's much to be gained by learning about your business accounting methods. Person-
ally, I always want to know whether my businesses are making money at any given time,
and without correct and complete accounting records, a business owner may think that the
enterprise is profitable when it is not.
Over 28 percent of businesses declaring bankruptcy cite problems with the financial struc-
ture of the company as the main cause of failure, according to a Small Business Admin-
istration study, “Financial Difficulties of Small Businesses and Reasons for Their Fail-
ure.”Take the responsibility of entrepreneurship by learning the basics of accounting.
Methods of Accounting
There are only two generally accepted accounting methods: cash and accrual accounting.
Small businesses have the option of choosing between these two, while other businesses
are legally required to use the accrual method.
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