Properly Starting A New Business (Part Two)
Months 4 to 12: Support Your Growing Business With Good Financial Systems.
This is part two of a three-part series on how to properly start up a new business with strong financial roots. Check out Part I of this series if you missed it, which looks at your organization from Months 1 to 3. This post will look at Months 4 to 12 of your new business.
In Months 4 to 12, you have an Adolescent Business. This business is well on its way to adulthood, but installing discipline and structure into the business is essential to ensure that it doesn’t start misbehaving and turn into a nightmare for you to manage.
Here are the five things that you need to do to keep your business in check as it starts to grow :
Review Financial Reports: Now that you’ve been tracking activity for a few months, it’s time to start reviewing your financial reports. QuickBooks has some powerful reports that can give you great insight into your business. Learn to read and use these reports and set up time to periodically (monthly) discuss with your management accountant.
Get Insurance Coverage: Risk is inherent in business. You could experience a theft of money or property, a natural disaster could shut your business down for a period of time, you could be subjected to a lawsuit, and so much more. Luckily there are ways that we can mitigate this risk by the proper use of insurance. Your management accountant will help you analyze the areas of risk that you are exposed to, and work with an insurance broker to cover these areas. .
Create Financial Projections: You have a much better idea of your business as it’s taking shape, so now is the time to plot its course for the next few months. Grab a pen and paper and start writing down your business goals. Work with your management accountant to translate this into financial projections which will be used as road markers to ensure that you stay on course to achieve your goals. Make sure you update these projections periodically using the actual results you obtain from QuickBooks.
Pay Estimated Taxes: Now it’s time to pay Uncle Sam! Did you know that the IRS requires you to estimate your future tax liability and then pay that estimate in quarterly installments? The financial projections you established with your management accountant are vital to predicting how much profit you will earn and be taxed on. Update the projections on a quarterly basis using the actual information from QuickBooks and send those projections to your tax accountant at the end of every quarter so they can figure out the amount for you to pay.
File & Send 1099s: You are required to produce and send 1099s to any qualified vendors that you paid during the calendar year. This requires that you track several pieces of information for each vendor: how much you paid them, how you paid them (cash, check, debit card, credit card), their legal entity structure (corporation, llc, sole proprietorship), their tax identification number, etc. Luckily QuickBooks can track all of this for you, and even file the 1099s for you at the end of the year. Your management accountant can help you set up, gather and monitor the 1099 reporting..
These can be daunting tasks, especially as the demands on your plate start growing. So don't go at this alone! Build a strong team of professionals to help you build your business and you will be successful. We have a lot of experience in helping businesses get established and grow, and have special products designed specifically for start-up businesses (along with all the QuickBooks training and support you need). So if you're ready to hire a management accountant and learn about QuickBooks, then schedule a free consultation with us and let's chat.