SMALL BUSINESS BOOKKEEPING TIPS SOFTWARE

When calculating labor costs, consider the following: If you decide to hire employees, you’ll be on the hook for more than just their wages. Calculate total labor costs before you hire. If the IRS believes the misclassification was intentional, the employer could be fined up to $1,000 per worker or imprisoned for a year.ģ.Employers must also pay 100 percent of the FICA taxes it would’ve paid per employee.Employers pay fees of 1.5 percent of wages and 40 percent of FICA taxes they didn’t withhold from an employee.Employers pay $50 for each W-2 form for misclassified contractors.The penalties for misclassifying workers are steep: They retain control over their schedules and business decisions. Contractors are people who work for your company on a project basis. You also likely have long-term business relationships with employees.

The IRS considers employees to be those over whom you have behavioral authority and financial control. When you’re ready to build a team, you have two choices: employees and contractors. Classify workers properly to streamline accounting.Ĭlassifying workers properly is a common accounting challenge.

SMALL BUSINESS BOOKKEEPING TIPS SOFTWARE

To improve your accounting skills, become familiar with Generally Accepted Accounting Principles (GAAP), data analytics, business intelligence software and cloud-based accounting. Track any business usage of your personal items. Open a business savings account as a rainy day or investment fund. Get a business credit card for expenses you can’t or don’t want to pay cash for. Open a business checking account as your financial hub and pay yourself a salary from it each month. Establish your company as a distinct legal entity, such as an S corporation or LLC. Start with a sound business structure.Here are some tips for keeping business and personal accounts separate: Although many entrepreneurs self-fund their businesses, business revenue and expenses must be kept separate from personal finances. One of the messiest accounting blunders small business leaders make is mixing their business and personal funds. Keep business and personal accounts separate. Companies that operate in a single state with a simple business structure have three accounting priorities:Ĭonsider the following accounting tips to keep your business’s financials in order. Small business accounting is relatively simple. What small businesses need to know about accounting We’ll share 11 tips to help demystify accounting and help you keep your company on the right path. Still, small business accounting can be a challenge for leaders without a financial background.

Your company’s financial documents can provide valuable insights into what to focus on, change and strengthen - and you should be able to read and understand them on your own. But learning the nuts and bolts of accounting is essential no matter your background. Most small business owners aren’t accountants or bookkeepers by trade.

Small business bookkeeping tips