At Accountfully, we advise business owners through all stages of growth. Whether you’re just getting an idea off the ground or considering a second office, we advise you at the highest level to help make smart decisions that will keep your business healthy and growing.
So, you’ve decided to start your own business—congratulations! (And give yourself a high-five for getting your ducks in a row before tax season.) Sole proprietorships are a common business structure for entrepreneurs when starting off. While you may not need to take any legal steps at the federal, state or local level, there are several steps to take to make sure you’re starting off on the right foot.
Banking
As a business owner, avoid co-mingling personal and business finances. To help prepare financial statements and tax returns, we recommend creating a separate business bank account to deposit business income and pay expenses. You should also get a credit card that is used exclusively for business expenses. By keeping finances separate, your statements will be easier to read and interpret. We also recommend a cloud-based solution like QuickBooks to keep things clear and concise.
Tip for growth: Keep business and pleasure separate. Simplify your life by setting up a bank account specifically for business.
Insurance
As a sole proprietor, you and your business are one and the same to the IRS. Meaning, if the business accrues a $1 million debt, the IRS will seek you out to cover it. What if you don’t have $1 million? The IRS can seize personal assets like your house or hard-earned retirement funds to cover the cost. To protect yourself, we recommend obtaining insurance to prepare for the unexpected. Contact an independent insurance agent, who will discuss options like disability coverage, auto insurance and liability coverage.
Tip for Growth: Don’t leave assets vulnerable. Prepare for the unexpected and make sure you have solid insurance coverage.
Taxes
As a sole proprietor, filing taxes is fairly simple because business earnings (or losses) are reported directly on your personal tax return. If you’ve had a particularly successful year, you’ll make quarterly estimated taxes to cover things like self-employment tax. We work with business owners to estimate and establish a quarterly payment plan so they don’t owe large sums of money at tax season.
Tip for Growth: Ignorance isn’t bliss. Work with an accountant, who will help map out quarterly payments so you know the numbers come tax time.
Wonder if you're doing things right?
Accountfully offers outsourced accounting services nationwide, with offices in Charleston, SC and Nashville, TN. If you would like to see how outsourcing your accounting can work for you, tell us about your business and we will gladly schedule a chat to discuss more.