What are the main steps in accounting for small businesses?

If you have launched a small business recently, it’s the best time to get the bases of accounting covered. It is tempting to skip this complex step but once done it can help your business grow considerably. Some of you may hire licensed accountants for the task whereas others may try to do it on their own. Here are the basic accounting steps that can help you keep track of and manage your money effectively. 

1. Keep a separate bank account 

Open a separate bank account to stash your business income. This will keep your records distinct and help avoid any confusion later. You can start with a business checking account and proceed to a savings account for tax withholding purposes. 

Do your research properly before opening the account. Compare the fee structures involved in business accounts and choose the one you find most suitable. 

2. Track every expense 

It is crucial to track every expense if you want to monitor the growth of your business. From deductible expenses to tax returns, take all sorts of expenses into consideration. You can leave this task to a professional accountant since it is quite time-consuming. 

The accountant may establish a system for sorting out your receipts and other financial records. They can help keep records of vehicle-related expenses, travel expenses, etc.

3. Learn tax obligations 

Tax obligations differ from one state to another. It also depends on the legal structure of your business. Understand the tax norms related to your business and keep track of income accordingly. If you are self-employed, you may have to withhold a specific amount of taxes from your income. You should stay abreast of the tax obligations to avoid future implications. Tax consultants can also make you tax-ready and help your business stay stable. 

You can handle all the aspects of accounting without having to lose your focus on the business. Hiring accountants can help you out. They manage the accounting department while you do your business.