5 Accounting Basics for The Work From Home Entrepreneur
The changing trends in the past year have not only revolutionized the decade-old and long working methodologies but also made room to bring forth new ones and also the modification of the previous ones.
As work from home entrepreneur culture started, not only did people start having workstations at their home but also a lot of bosses and managerial level personnel started working from their homes too.
As the year 2020, had its troubles and challenges for the world of business but also created a lot of gaps and opportunities for new businesses and start-ups to emerge and showcase their products/services.
As most of the new businesses and start-ups started from home entrepreneurs due to lockdown and other circumstances entailing them to have an office and gathering of people.
Most start-ups have either a single or two personnel in the initial stages, handling all the departments, i.e., marketing, sales, planning, execution, PR, etc. on their own. Thus, one has to multitask the functions but no one can overlook one of the most important aspects and department of them all, i.e., Accounting.
The need and basics for accounting
Accounting is not only required in the fluent functioning of a start-up or company but also is very important as all the transactions, book-keepings, costs incurred, taxation, etc., if not kept in track and check, can cause serious trouble for a start-up or company.
But here we will talk about some of the few basics that are very important and must know when it comes to Accounting for home entrepreneurs.
- The first thing is registering the business as a Sole Proprietorship, LLC, Partnership or Corporation, each has their pros and cons, and we would advise you to read them thoroughly and pick the one that suits you perfectly.
- The next step is opening a business bank account, for this, it is strongly advised to visit the banks personally and find more about them to compare the banking fees, the proximity of ATMs to your home and limits and charges on other transactions.
- Selecting an accounting method is very crucial for beginners as there are two types; cash-basis and accrual-basis, both have their advantage as cash-basis as the name suggests are recording revenue when you receive and recording expenses when you pay, it is one of the most popular options. Accrual-basis is the method for when you record revenue when it’s confirmed and record expenses when they’re incurred before the actual expense.
- The next important step is picking your bookkeeping method, either doing it yourself, outsourcing, cloud-based etc. based on your budget and your time.
- The next is one of the main basics, one should know, i.e., tracking expenses, when beginning with a new business/start-up one should not take keeping a tab and check on every expense such as credit card statements, financial statements, office bills, etc. One should always select their methods of the payment beforehand and keep following that and also one should learn about their tax obligations and if any special taxes or rebates applicable, etc.
Accounting is simple as long as it is maintained regularly
Thus, the things stated above are just a few important accounting basics for work from home entrepreneurs that they need to learn and give priority to, even before starting their business/start-up as a home entrepreneurs.
Good accounting knowledge helps one to do the crucial task on a tight budget, monitor the growth of the business/start-up, improve the overall efficiency of the related aspects and the business/start-up as a whole. It also helps in simplifying tax season as it involves tedious tasks and demands more dedicated time. Also, there are a lot of online courses, etc. provided for the same at affordable fees, thus one should give it a serious thought as accounting is the backbone of a business/start-up and its deeper knowledge will only do home entrepreneur good in handling the business/start-up better and monitor the overall growth properly.
“Don’t ever let your business get ahead of the financial side of your business. Accounting, accounting, accounting. Know your numbers”– Tilman J. Fertitta