Tax And Accounting Tips
Most people who decide to start their own businesses have great ideas for his or her business. They may even be experts at what they do in their business. However, most people who start their own businesses neglect to realize that they need a team of experts to back them and help these get their business going. Most experts say that for the person who’s starting their own business, they should have a panel of directors behind them, and that this plank should contain successful companies, accountants, bankers, insurance, investment, and legal advisors. Startup businesses often fail to consult with an accountant when starting their business because they feel the accountant is not practical for a startup business.
Startup business owners often feel that accountants are very costly to seek advice from with when starting their business. While this may be true, it is often the best investment a startup business proprietor can make in his or her business. Many startup companies purchase an accounting package deal and make an effort to set up the program on their own, without consulting a knowledgeable accountant.
This often leads to more problems and higher expenses for the startup business. Inaccurate aging reports for accounts receivable and accounts payable. Inventory not being right. Reduction and Income statements not being correct. These are just a few of the problems I have seen. An accountant knows how to properly setup an accounting program so that inventory, accounts payable, accounts receivable, payroll, sales tax, etc. are setup so that the business proprietor can run accurate reviews.
An accountant can also help the startup business proprietor to find the best accounting software for the kind of business that has been started. Go through the following exemplary case of a startup business that select not to consult with an accountant to help set up their accounting software. ABN Company began their business on January 1. The owner, Jim, decided to buy accounting software and setup the software himself. He proceeded to set up the program and set it up. However, he did not setup the software correctly.
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He entered A/R and A/P balances for every customer and merchant without entering the individual invoices for every customer or vendor. He also didn’t setup his inventory items properly so that they did not reflect the right income and expenditure accounts. He made a mess of setting up the accounting software but didn’t realize the error(s) until almost 7 weeks later.
2,500 to get his accounting software set up properly. 7,500 to improve the errors in his accounting software. Had Jim waited until the subsequent January or February to consider the erroneous accounting information to an accountant to do his business fees, it could have cost him more even. His business tax return would have cost him 4 or 5 5 times as much to have it prepared correctly, and the accountant most likely wouldn’t normally have corrected the data in the accounting data file.
As an accountant, I have worked with clients who have come to me when they begin their businesses. They might not like the upfront cost, but they realize it is an investment that will pay off in a comparatively brief period of your time. I’ve also caused clients who’ve setup their own accounting software without consulted an accountant to help them. I’ve had clients who’ve used their accounting software for quite some time, making erroneous entries the whole time.