Your Go-To Checklist For Small Business Accounting

Whether you are a start-up or an established business, you need a consistent way to do the accounting. However, you must take a look at the checklist for small business accounting below to help you keep a track of the financial tasks.

Starting The Business

As a startup business, there are many tasks you must complete to begin operation.

Choose the legal structure

Your legal structure determines several important factors for your company, including tax liability. The following are the four major types of business structures to choose from.

•          Sole proprietorship is a single-owner business. The owner and the business are considered the same legal entity. As the owner, you must pay the business debts that the company cannot pay.
•          Partnerships have two or more owners. The owners are usually responsible for the business defaulted payments.
  
•          Corporations are separate legal entities from the owners. The owners aren’t personally liable for the business’s debt.
  
•          S corporations tend to separate the owners from the business, but have one level of taxation.
  
•          LLC or Limited Liability Companies- combine parts of corporations and partnerships. Owners aren’t personally responsible for business debts and share tax liability.
  

Getting registration and identification number

Another checklist for small business accounting includes getting registration. Depending on your location, you may need to register the business with your state. You can take help from an accountant since he has knowledge about how to proceed.

Also, check for business licenses or permits you need to have for your location or industry. You need to register your business for state and local taxes if applicable.

You also need to have an EIN or employee identification number if you hire workers, withhold taxes or run a partnership. The identification numbers are important for filing taxes.

Select the accounting method

You need to select the consistent method to do the accounting. There are major accounting methods to choose from- accrual and cash-basis.

Cash basis accounting- this is the simplest accounting method. You record all incoming funds when you receive money. You also record all outgoing funds when you spend money.

Accrual accounting- you record incoming and outgoing funds when you incur them. For instance, you record revenue when you invoice the customer.

Hiring an accountant will help you deal with such accounting types easily.

Your Small Business Accounting Checklist

Daily checklist

• ü  Review cash-you must check the amount of cash you have on hand every day. Double-check so you have enough cash to cover expenses.

Weekly checklist

• ü Invoice customer-ensure you send an invoice for every sale that requires it. Check unpaid invoices
• ü  Pay invoice-pay invoice and bills before the due date. Follow the payment instructions on the invoice.
• ü  Record transactions- throughout the week, keep copies of the invoices, payments, receipts. Record the incoming and outgoing money.

You can check out checklist for small business accounting  for more information.

Apart from a daily or weekly checklist, you must have a monthly checklist. At the end of the month, reconcile the bank statement with the accounting books. Count and record the inventory, etc.

These are the important checklist for small business accounting that you must consider.