When it comes to setting up a new business, accounting can actually be one of the more difficult things to get in order. The tax and bookkeeping requirements differ between industries and according to what sort of business you are setting up, which means that it is easy to make mistakes if you don’t know the tax system well.
If you are starting your first business, and don’t really know what your obligations are, then consider the following:
Speak to an accountant!
If you really don’t know where to start, then it is always a good idea to speak with an accountant or professional bookkeeper. An experienced accountant should know exactly what your requirements are when it comes to setting up a new business. If possible, try and choose someone who has experience in the field that you are starting your business in.
Although you may decide that you don’t need to hire an accountant regularly, an initial consultation can help you get set up. Knowing what sort of records you have to keep, what sort of things you have to report, and how you need to report them can help you make sure that you fulfill all of your tax obligations.
Keep good records:
When it comes to starting your first business, the most important thing to do is to get into the habit of keeping good records. Buy yourself a filing cabinet, learn how to use it efficiently, and keep anything that you think might be relevant when tax time comes around.
Remember, you can always throw something out later if it turns out to be irrelevant and useless, but it is very hard to recover something once you have thrown it in the trash. A good habit is to keep everything that has the potential to be useful, at least for your first few years running a business until you know more about what’s required from you.
Understand how to use the tax system to your benefit:
If you’re a bit smarter than average when it comes to keeping your finances in order, you might decide to try and set up your business to maximise your income and minimise the amount of tax that you end up paying. There are a lot of things that you can do if you have this in mind, including carefully monitoring your income vs your expenses to get a nice balance. If you do decide to use this, then you will need to speak with an accountant or do some in depth research. The Australian Tax Office (ATO) website has a lot of useful information.
When it comes to starting your first business, accounting and record keeping can seem like a daunting task. However, as long as you understand what’s required of you from the start, it actually isn’t as difficult as it seems.