A certified public accountant versed in tech-related businesses and startups can guide you past a number of tax and accounting issues. For example, entity selection is pivotal for choosing the business entity that most appropriately classifies your company.
When developing a startup tech company, it is also crucial to determine the accounting procedures and practices you will put into place from the onset of things.
Which Accounting Software Should You Choose For Your Company?
As your tech business grows, you are going to need an accounting software package. If you keep your financial records with excel spreadsheets, you may find eventually the bookkeeping method can no longer control the growth of your business.
Certain bookkeeping packages work exceptionally well for real property/real estate, and there is other software that works great for project accounting. While generalized accounting software packages are frequently less costly, whereas the industry-specific accounting software is quite often more pricey, but know that industry-focused bookkeeping software can save you money and time as your business grows.
How Should I Choose An Accounting Method?
Big corporations are required to adhere to GAAP, or the Generally Accepted Accounting Principles. Small Businesses, on the other hand, can exercise more liberties in how they record their records. When you are the owner of a start up, you may prefer the cash method of accounting,
Some more advanced methods of accounting, such as the accrual method of accounting, may better serve you as your business grows. The accrual method of accounting records expenses and income upon invoice, rather than waiting for cash to change hands. This bookkeeping method provides you a more expansive insight into your finances.
As far as taxes are concerned, if you sell, purchase, or produce merchandise, rules apply as to when you have to use the accrual method of accounting.
Creating A Budget
A number of the small business accounting software packages will allow you to construct a budget, either based on last year’s records or completely from scratch. Establishing a budget is necessary considering the fact that it will create your business standards of performance. After a period, you should compare your businesses’ performance versus the budgeted amount. This analysis will show you whether or not you might satisfy your year’s sales goals. This can help keep businesses profitable.
Measuring Your Success
And choose an accounting software that allows you to compare the current year financial statement with those of the previous year. This can help you set goals, see trends, gain insight.
Tax Planning For Tech Startups
There are number of deductions and tax credits that might be available to you.
- Home Office Deduction
- Auto Deductions
- Real Property
- Clean energy manufacturing credits, tax credit for investments in manufacturing facilities for clean energy technologies.
If you need some help with the accounting and tax issues related to your technology business, give us a call.