What entrepreneurs in Rancho Cucamonga should know about bookkeeping basics

Entrepreneurship means something different to everyone. For some, it means spending millions to establish a new corporation. For others it means working at a Rancho Cucamonga kitchen table and saving enough from your pay check to cover required fees. The financial differences between these scenarios are infinite, but there is one striking similarity, and that is the importance of good bookkeeping and accounting.

Whyte & Associates, Inc. offers a variety of scalable solutions, from just the basics to full payroll, accounting, tax planning, and more. Here we discuss a few things that entrepreneurs of all types need to consider when starting a new business.

Think ahead

Tax strategy is just as important for the kitchen-table entrepreneur as it is for the mega-corporation. Ideally, this should begin before your business actually exists. That is because one of the most important decisions you will make is your legal structure. Sole proprietorship is usually the simplest and least expensive upfront, but it may not be an option if multiple people are involved. Partnerships may be general (GP), limited (LP), or in certain types of business limited liability (LLP). Additionally, the corporation or limited liability company (LLC) structures sometimes make more sense, even for small business.

When choosing your business structure, as well as establishing a bookkeeping system, don’t just look at where you are now. No matter how big or small your business starts, odds are you intend to grow. For example, you might start as a sole proprietorship with the intention of taking on partners later, or as a corporation with plans of expanding into other states. These types of changes can be more complex than you anticipate. Look ahead so that you can make smart decisions now and create a solid foundation for growth.

If you are taking orders and keeping the books, remember that it probably won’t always be that way. Down the road you’ll likely have employees processing transactions and an accountant preparing statements. Be consistent and document your processes in a way that others could understand. This will make it much easier if you need a professional to review your books, or if you transition financial duties to someone else.

Get help when you need it

Fully outsourced bookkeeping has virtually endless benefits, but it may not be the right choice for everyone. If you are just starting out on a shoestring budget, keeping your own books might be the only feasible option, while large companies may have an accounting team on staff. However, the choice isn’t “all or nothing,” thanks to our flexible services. Without a background in accounting, some tasks can be overwhelming, and a simple error may be very costly. Furthermore, your time is valuable, and in short supply. In the big picture, professional assistance can be the most cost-effective option, especially in areas such as:

• Payroll – This is a notoriously complex aspect of financial management, with various payrates, bonuses, overtime, deductions, taxes, insurance, and more. Furthermore, every employer knows that errors or delays in pay checks are one of the quickest ways to destroy employee relations, which adds to the stress.
• Tax preparation – Even if you feel confident keeping day to day books, a stack of IRS (Internal Revenue Service) and FTB (Franchise Tax Board) forms can be daunting. Personal income taxes are complex enough that many individuals come to us for assistance with preparation, and the challenges multiply when you start a business.
• Entity formation – When starting a business, you need to first choose the best structure. Next, you’ll need to acquire licences and file organizational documents as required with multiple agencies, at the local, state, and federal levels. If you are doing this alone, prepare for many hours spent researching applicable requirements, learning to prepare needed forms, and worrying about potential errors. However, with the assistance of an experienced professional, the process is seamless and usually quick.
• Business consulting – What new businesses, especially first-time entrepreneurs, probably need the most is some solid advice. In the early stages you will be making countless decisions that are going to impact your bottom line for years to come. Unfortunately, far too many business owners make these choices without fully understanding the ramifications, or their options. From tax strategy to avoiding common financial pitfalls, we are here to guide you on your path to success.

At Whyte & Associates, Inc., we offer monthly, quarterly, or annual bookkeeping, as well as a host of other valuable financial services, a few of which are highlighted above. From personal finances to opening, closing, or operating a business – you can count on us. Just call our Rancho Cucamonga office at (909) 575-0080.