If you have launched or just planning to launch your online store, congratulations! It takes uncommon passion as well as perseverance to reach where you are today. However, as you know, business ownership is a relentless flood of satisfying milestones combined with growing to-do lists. With your launch, you must get on top of the accounting tasks that come along with having a store. Any idea of how to manage the accounts? No worries. Here is a list of small business accounting tips that will help you to manage your accounts like a pro. These tips will give you the confidence to know you have your bases well and are all set to move on to the next item on your business to-do list.
List of Small Business Accounting Tips
Open a bank account- One of the important small business tips is to open a new bank account. After you have legally registered your business, you will need somewhere to hide your business income. Having a separate bank account keeps the records distinct and will make life simpler when the next tax time comes. Note that partnerships, corporations, and LLCs are legally obliged to have a different bank account for business. Sole proprietors do not need a separate account but it is highly recommended.
Start by opening a business checking account, and then a savings account that will help you to organize money and plan for taxes. For example, set up a savings account and save away a huge percentage of each payment as your self-employed tax maintenance. Next, you should consider a business credit card for starting building business credit. LLCs and corporations are required to use a distinct credit card to avoid blending business and personal assets.
Before you go to a bank and discuss opening an account, it is necessary to do research. Look around for business accounts and compare the fee structures. Most business checking accounts have charges that are much more compared to personal banking, so you need to pay close attention to what you will be obliged to.
To open a business bank account, you need a business name, and generally, it should be registered with your province or state. Check with the bank for what documents you need to carry while opening a bank account.
Keep a track of your expenses- The groundwork of solid business record keeping is learning to track your costs effectively. It is an important step that lets you check the growth of your business, establish financial statements, keep a record of deductible expenses, create tax returns, and support what you report on the tax return.
Right from the initial stage, you must create a system for organizing receipts and other vital records. This procedure can be simple, or you can even use services meant for this. Starting your business at home is one of the best ways to keep overhead low, and you will be suitable for some special tax breaks. You can deduct the part of your home that is utilized for business, as well as your internet connection, transportation to and fro from work to home, and for business errands.
Create a bookkeeping system- Before we start establishing a bookkeeping system, it is helpful to understand what bookkeeping is, and how it varies from accounting. Bookkeeping is the process of recording transactions, classifying them, and resolving the bank statements.
 Accounting is defined as a high-level process that looks at business progress and makes sense of the data collected by the bookkeeper by developing financial statements. As an owner of a new business, you must determine which bookkeeping method to utilize:
- You can decide to go to the DIY route and make use of different software like Wave or Quickbooks. Instead, you could use an Excel spreadsheet
- You have the choice of using a part-time or outsourced bookkeeper that is either cloud-based or local
- When your business is huge enough, you can choose an in-house bookkeeper or accountant
- With plenty of options out there, you will find a bookkeeping solution as per your needs
Create a payroll system- One of the significant small business accounting tips is to set a payroll system. As an owner of a new online store, you will likely be involved in a one-person show. However, maybe you will hire a part-time employee to assist you out, or a freelancer to create your logo. Right away, you need to create whether that individual is an employee or an unbiased contractor.
For the employees, you need to decide on a payroll schedule and make sure that you are withholding the right taxes; there are a lot of services that can help you in this regard. As far as independent contractors are concerned, be sure to maintain a record of how much you are paying to every person.
Investigate import tax- Another one in the list of small business tips is to research the import tax. Based on your business model, you may be planning to buy and import goods from various other countries to sell. While importing products, you will be subject to taxes and duties which is worth mentioning if you run a dropshipping business. These are fees that your nation imposes on the incoming products. Take enough time to learn about importing products into Canada and the US, and the related taxes, so that you understand the rules from the get-go.
Also, if you are importing the goods, a duty calculator can assist you to estimate the charges in your own business and plan for expenses.
Decide how you will get paid- When the sales start coming in, you will require a way to accept the payments. If you own a store on Shopify, then you can utilize Shopify payments to accept credit card payments. This saves you from the difficulty of creating a merchant account or a third-party payment gateway.
If you want to accept the payments of the credit card without making use of Shopify Payment, then you will either require a merchant account or you can use a third-party payment processor like for example, PayPal. A merchant account is a kind of bank account that lets your business accept credit card payments from the customers. If you make use of a third-party payment processor, generally the fees are around 2.9% + $0.30 per transaction. You can consult this list of small business accounting tips to help you find a payment gateway that will work for your specific location.
Remember the deadlines- Speaking about those tax deadlines, whatever will help you remember that the tax deadline is nearing, do that. A countdown, phone reminders- anything for that matter. A looming tax deadline can be stressful, mainly if you are in a hurry because you forgot, and any kind of mistake made can take a longer time to process.
It is quite a simple step. Make a note of the deadline, fix a reminder beforehand so that you have enough time to fill your tax returns without any mistakes and the rest happens smoothly.
Keep a track of all the receipts- Another one in the list of important small business tax tips is to keep a track of all the receipts. We are not saying to keep every single receipt of all your purchase but keep any business-related purchase receipts so that you can claim for all business expenses. It depends on the kind of business you own.