At long last, the NBA draft is only two days away! For quite some time, I was planning out different scenarios for who the Celtics and Lakers would take at #1 and #2 and then who the Sixers would be left to choose from at #3. Over the weekend, everything changed as the Sixers traded for the #1 pick. In return, they sent the Celtics the #3 pick and a future #1 pick in 2018 or 2019. Now, we get a chance at the consensus top pick in a loaded draft – Markelle Fultz. If this is who we are taking (and by all accounts it does seem like it), then we have the makings a young, solid team in Fultz, Joel Embiid, Ben Simmons, and Dario Saric. Now we just need a shooting guard and to stay healthy!
Over the past few weeks, we have explored the basics of getting your business entity started – choosing your entity, forming your entity, and keeping your personal assets safe. Another crucial step when you first start your business is to get your accounting system setup. From my experience, many small business owners push off the accounting system until the bitter end. For most, having your books in order isn’t a top priority as it doesn’t bring any cash flow to the business per se. I can tell you that not getting your accounting setup properly will cost you much money and time in the future. So how can you avoid all of this? Here are some simple steps that can help you get started:
- Setup an organized filing system. Setup a place in your office where you can store all of your receipts and other supporting documents separate from your other paperwork. If you have a separate filing system for different types of items (receipts vs. statements vs. deposit slips, etc), that works even better! If you don’t like paper, setup a secure, paper-less organization system on your computer. Then buy a scanner.
- Document everything. Regardless of how immaterial an item may seem, save a copy somewhere – in your filing system or on your computer.
- Decide on a system. For many small businesses, we typically recommend getting started using QuickBooks Online. If you are a low transaction volume business and are computer savvy, Excel may work for a period of time.
- Engage a professional. Regardless of what accounting system you decide on, engaging an accounting professional/CPA is paramount. He or she will guide you on major items to track, such as types of income and expenses, and what other financial analysis you need to know for your business.
- Develop a chart of accounts. If you ever want to understand your numbers, this is the first step. Work with your accounting professional/CPA to setup your books to optimize analysis for businesses in your industry. For example, what costs are direct costs vs. overhead vs. marketing costs and business segment/product line profit and loss analysis. This analysis will help guide you in future decision making.
- Be consistent. Regardless of what you end up deciding to do, staying consistent is very important. Setup up days and times on your calendar every week to keep your accounting system current. Staying on top this will help you record transactions in an efficient manner and not forget something (like a deductible expense!). Also, if you are doing your own book-keeping, make sure you enter similar transactions the same way every time. This will not only help your accounting professional/CPA do your financials or taxes, it will help keep his or hers’ costs to a minimum.
If you would like to discuss anything in more detail with this please let me know!
