2 Accounting Tips For Small Home-Based Businesses
If you recently started a small business in your house, it is important for you to start out right with your accounting activities. Having a business at your home can be convenient, but it can be an accounting nightmare if you fail to take the right steps from the beginning. Here are two things you should know about this to help you get organized with your accounting tasks needed for your new business.
Keep It Separate
Even when a person runs a small business out of a separate building, it can be hard to keep accounting records separate from personal records. This challenge is even harder, though, when the business is in the person's home. When you run a business from your house, you will have the ability to take tax deductions for certain household expenses, and you will be allowed to deduct all the expenses that directly relate to your business.
The problem with this occurs if you use a credit card for business and personal purchases. You may end up missing some expenses for your business records, or you might inadvertently mistake personal expenses for business expenses. Here are some tips to help you keep your expenses separately:
- Use the business space in your home for business purposes only, and use your living space for living.
- Use separate accounts for your business, including a separate checking account and credit card.
- Open up business credit accounts in the name of the business, and not in your personal name.
If you can keep your business finances separate from your personal finances, you will be able to manage your accounting records easier and more accurately.
Use A Professional System To Keep Your Records
The second thing to consider is using the help of professionals for managing your accounting records, and this involves two things:
- Accounting software – If you are still recording your accounting records manually, you must change the way you do this. There are dozens of great accounting programs you can purchase for your computer, and these programs will make your accounting tasks much easier. Using accounting software will also make tax time less stressful for you.
- Accounting services – If you are really bad at record keeping, you could always hire an accountant (such as Teri J Henderson, CPA, P.A.
- ) to help you manage the weekly records. Even if you do not decide to do this, you should hire an accountant to help you with your taxes at the end of the year. This is the best way to prepare accurate tax returns and get the most of out your returns.
If you would like to learn more about accounting for home-based small businesses, contact an accounting company in your area. They can help you set up your books, prepare your taxes, and learn how to manage your accounting tasks the right way.