When you start a small business, there are a few basic accounting rules that you need to know regardless of whether you are the only employee or your small business has a few employees.

Keep Business & Personal Expenses Separate

The most important rule when you are running a small business is to keep business and personal expenses separate. You need to set up a bank account just for your business. Run all financial transactions from your business through this account. You are even going to want pay yourself out of your business account into your personal account, just like if you were working for an employer.

Even if you are the only employee right now, it is smart to set up a separate business account. This will help you keep track of how much money you bring in, what you spend money on, and your salary that you bring in. This will help you keep better track of your accounting expenses, and it is best to start your business off on the right track.

Keep Track of Transactions

Your bank account just lets you know who you paid money to, not why you spent that money and what you got for your money. When it comes time to do your taxes, the why behind all of your transactions really matters.

It is easiest to explain the why when you keep track of your transactions throughout the year. There are lots of different software programs that you can install that will help you keep track of your receipts and your transactions.

When it comes time to do your taxes, you will be able to easily establish how much money you brought in, your expenses, and what you made after expenses when you keep track of your transactions throughout the year.

Know How to Pay Your Taxes

Next, you need to understand how your unique tax situation works. If you are self-employed, you need to pay estimated self-employment taxes. If you employ a few employees, you need to make sure that you are taking money out of each paycheck and paying the government the estimated taxes for your employees.

If you are selling certain products, make sure that you know what type of taxes that you need to collect and that you are collecting and paying your taxes on time. Paying your taxes late, even throughout the year, can be detrimental to your financial well-being. If you have questions about paying taxes, look for a local accounting service like Emerald Financial Partners.

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