Whether you’re monetizing a hobby or sharing your skills with the world, taking steps to start a business can be overwhelming. Steven M. Vogt, C.P.A., has the financial expertise to guide you through the process. For more than 20 years, he's been helping clients in Chandler, AZ, launch their businesses. Below, he outlines five tasks you need to complete as you build your company.
Choose an Accounting Method
There are two basic accounting methods: cash and accrual. Burgeoning small businesses tend to use the cash method, which records income and expenses as the money is received and spent. Larger, more established businesses use the accrual method, which records income and expenses as they are incurred, even if the money hasn’t changed hands yet.
Track Your Expenses
When you start a business, it seems like expenses add up quickly. Taking advantage of a reliable bookkeeping service is the best way to ensure every dollar is accounted for, so you get the most accurate refund when you file your taxes.
Apply for a Home License
Depending on the industry, the nature of your work, and your financial situation, you may be able to operate your business from home. You may be eligible for a license that allows you to deduct space usage and utilities as business expenses. Research these qualifications, so you understand the benefits of licensing and know how to complete your application.
Establish a Business Structure
From sole proprietorship to an LLC, there are several ways you can legally form your business. It all depends on the nature of your work and the industry. For example, independent graphic designers may find a sole proprietorship works best for them because the liabilities involved are personal—when tax season rolls around, they'll file everything on their own return.
Get an Employer Identification Number (EIN)
There are many benefits to applying for an EIN, but hiring employees and protecting your Social Security Number are the biggest for new business owners. Having this number also helps you keep your personal and business identities separate, which can make your next tax filing easier.
If you're ready to start a business, Steven M. Vogt, C.P.A., hopes this primer was useful. If you'd like to learn more about his firm’s accounting and financial services, visit him online or call (480) 732-9898.