| Starting a new business is exciting, but in that | | | | methods, like LIFO (last in first out), FIFO (first in |
| excitement are a lot of decisions to be made. Out | | | | first out), and Lower of Cost or Market. You will |
| of all them all, the financial backbone of your | | | | need to choose the right method for your |
| business needs to be seriously taken into | | | | business. |
| consideration. A large part of that are the | | | | Financial records for your business. You have a lot |
| accounting decisions you will need to make. When | | | | of choices here! Are you going to use paper |
| starting a new business, you will want to spend | | | | ledger sheets to record sales and purchases? Are |
| some time on the following areas: | | | | you going to keep track of income and expense |
| The type of organization your business is. Are | | | | using a computer program? Some bookkeeping |
| you a sole proprietor or are you in business with | | | | software has the ability to integrate your data |
| someone else? Will you organize as a partnership | | | | with an accounting professional, thus saving you |
| or as a corporation? Limited liability companies are | | | | money. You will need to decide the best method |
| the newest form of entity - is this form right for | | | | for your business. |
| your business? Choosing an organizational type will | | | | Feeling a little overwhelmed? All of the above can |
| determine what federal and state income forms | | | | be much easier if you have an accounting |
| to file. For example, a corporation may need to | | | | professional to guide you. This is another decision |
| file annual reports in the state of the incorporation. | | | | you will need to make. Will you hire an in-house |
| The fiscal year of your business. Most businesses | | | | accounting clerk or will you out-source your |
| use the calendar year, but that may not be the | | | | accounting needs? |
| proper choice for your business. For tax | | | | Unfortunately, too many new businesses skimp |
| purposes, many businesses choose a different | | | | on setting their accounting backbone up correctly |
| beginning and ending date than the January | | | | at the start of their business. The financial |
| through December calendar year. | | | | backbone needs to be strong, as it is the support |
| The accounting method for your business. Are | | | | of your entire venture. You can get expert help in |
| you going to use a cash or accrual method of | | | | these initial stages, and decisions, in setting up a |
| accounting? The cash method is easier for startup | | | | new business, so that your business starts off |
| companies, however, if you have inventory - the | | | | right. |
| IRS may force you to use accrual. | | | | Starting a new business is exciting! If you take |
| You will have to decide if your business will follow | | | | the time to talk with your accounting professional |
| GAAP (generally accepted accounting principles) or | | | | about the above decisions, you will help ascertain |
| Tax Basis for financial statement disclosures. Your | | | | the best possible beginnings for your business. |
| banker may prefer one over the other. | | | | Good luck! |
| The method of valuing inventory for your | | | | For accounting help with your small business visit |
| business. Accounting principles allow many | | | | the Accounting Aisle. |