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How to set up your business tax accounts

paymentdue19086402.jpg Your business will have to pay taxes just the same as any other person or business. Any one that runs any type of business will need to have a good set up for their business tax accounts to make tax season easier on everyone. There are different ways to set up the same type of account for anyone. You should make sure that your tax accounts are set up in a way that is easily understandable to you. You will also need to have your accounts set up in a way that your CPA can also understand.

You should have a desk and computer to help streamline the set up of your business tax accounts. Having a set place to do all the financial parts of your business will help you stay focused and even to make fewer mistakes. This space can be anywhere in your home or place of business. Most businesses have an office in order to have a computer to use in order to set up your business tax accounts. You can also use the older style of ledgers to keep your records, however, this can become a problem if numbers are unreadable or transposed.

If your business is small you may only need to set up a simple profit and loss account to keep track of the cash flow in your business. A profit and loss account is a summary of business transactions for a given period which is normally 12 months. You deduct all expenditures from your total income when you are doing a profit and loss account summary for your business. This way shows the "bottom line" for your business or whether your business made a profit or a loss at the end of your 12 month period.

Businesses can use the profit and loss statement for many reasons but it is mostly used to work out your tax bill. Because of the way your profit and loss statements are calculated it can make a perfect record of your how much money your company made and then how much your taxes are according to that profit.

When you are using a profit and loss statement in order to set up your business tax accounts you will want to include a few things. Some of the extra things you need to take into account when making a profit and loss statement will include:

  • Business income for your sales. This would include all sales for the given period that you have made. You can write these sales down in a ledger or use a computer spreadsheet. You will need to find the best way for you but should be backed up no matter what way you decide to use.

  • Business income for other things. This would include any interest from bank accounts, sales of any equipment that you sold when you no longer needed them and rental income. Any cash that came into the business needs to be accounted for. These numbers for other income should be labeled differently in your ledger or spreadsheet.

  • Business expenses will also need to be recorded in your ledger or spreadsheets. This expense will include anything you had to repair, advertising or promotions given by your business and any bad debts or legal fees you may have had to pay. Once again, add these into your profit and loss ledgers but labeled as business expenses so that your CPA can easily understand the numbers.

  • Business costs should also be added to your ledger or spreadsheet under its own label too. This would include property or equipment purchase or rental for you to make your product or give your service.

There are many ways to set up your business tax accounts. Talk to a CPA if needed to find what is best for you and your business.

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