Set up your accounting software

Back at your office you can step over to your computer, fire up the accounting software and set up your company’s accounting file. Go through this process carefully, naming and grouping each item in the chart of accounts per your tax pro’s instructions. You might want to do this task yourself instead of delegating it. Your accounting software makes it easy and setting up the account system yourself will give you a hands-on feel for the logic behind it.

Or you could have a bookkeeper or assistant handle this task for you. (Although, if they haven’t done this before, it would be better to do it yourself.) Just be sure items are named and grouped exactly the way your accountant wants it done. This is not the place for uninvited creativity!

Now you have the empty “buckets” ready to be filled with real numbers when you start making sales and purchases.

For more about your accounting system:
Tax Center / Recordkeeping / What

For how to follow through with maintaining it
Tax Center / Recordkeeping / Who

Create a budget, too

Now that you’ve got your accounts set up in your accounting program, snoop around in the program to see all the types of reports it can give you. Wow -- you’ll find all sorts of reports to help you look at and guide your business as it grows.

Why not set up an annual budget while you’re at it? Then, each month you can compare where the business actually is, financially speaking, to where you anticipated it would be according to your budget.

Coordinate with your business plan

If, as all smart business owners should do, you created a business plan, you can transfer its numbers into your budget. After your company develops some history, you’ll see how good the predictions in your plan turned out to be. Then you can see where to make adjustments based on actual performance.

Find the software’s setup area for budgets. (Your program will instruct you how to use it.) Basically, you’ll want to fill in numbers for the different expenses you anticipate. For some expenses, the amount will be the same each month; others may vary by amount and/or frequency.

Print out the budget you’ve created-- now you are looking at your projected monthly “nut” -- what it will cost you to keep your business in operation. Use this as your first guide for cash flow planning.

You can also add various estimates of income. Now you’ll be able to see when you will break even -- the point at which expenses are no longer greater than income. Have some fun with this now, while you have time before you get totally embroiled in the thick of doing business. Then, once you’re up and running, revisit your budget vs. actual picture monthly to see how things are doing.

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