With business bookkeeping and basic tax tips for new and old entrepenuers

Thursday, October 30, 2008

What else do I need to get my books started?

Business School 101 - Lesson 1 cont.

From: Alamo Bookkeeping Associates

Alright, so when you go to the bank, they are going to ask you if you will be doing the business in your own name, or if you have a "DBA" (Does Business As). A DBA, also called an assumed name, is simply a name you have chosen for your business, that you use in place of your name. For instance, Your name is Jackie Jones, but you want your business to be called, "Jackie's World", or "Juicy Juices", or any other name you want. The business name does not have to have your name in it. And you don't have to be a corporation to use a business name (more on incorporating later).

So how do you get an assumed name? Well the best way to do it is to go to your county courthouse. They will have an office for assumed name filings. Many times this office is part of another office, such as for marriage licenses or something else. You fill out a form and let them know the name or names you want to use. You may need to pick out more than one name in case someone else beat you to the name, so have an alternate business name ready. The clerk will tell you if the name you picked is already taken or not. However it only tells you for the county, not state or nationally so you may want to check the phonebook or Internet to see if someone else is using that name extensively. You can also go to the web site for your Secretary of State and apply there, however it may take longer.

An assumed name certificate is good for ten years in Texas, this may be different in other states. There will be a nominal fee, probably not more that $20.00, depending on where you live. The clerk will ask you if you need an "official" certificate, say yes, as you will need that for the bank.

This is what you take to the bank when you open your business account. You are now an "official" business.

Next: Ok, now I have a business account and name, now what?

What exactly is a set of "Books"?

Business School 101

From Alamo Bookkeeping Associates

Ok, so now you have a small business started, maybe have big plans and you are concerned about getting a set of "books". So what exactly does that entail? Well it entails a lot of small things. First of all, you should NOT combine your personal expenses with your business expenses in the same bank account. Number one, it's hard to remember when you go back and look at your check register (if you bother to keep one), whether something you bought at the grocery store was for business or personal, unless it was obvious office supplies. There are a lot of things you can buy at a grocery store for an office or business, such as paper goods, cleaning supplies, water, snacks, etc.

So the best thing to do from the start is open a separate bank account at your bank or another one that is convenient to you. Many banks have free checking for small businesses. If you are a big business, then you will probably have to pay some fees due to the number of transactions you have. However if you are just starting out or plan to have a slow start you do not need anything other than a basic checking account, with maybe a debit card. Don't bother with the hard sell of your friendly banker, he will try to sell you top of the line with a nice monthly fee for them. You don't need that now. You can always upgrade later. However I definitely recommend that you ask for your check copies to be returned with your bank statements. It is a lot easier to get the copies with the original statements than to request them later.

The other reason you don't want to mix personal purchases with business ones is because if by some remote chance you get audited by the IRS (highly unlikely for a small start-up), or have to show your bank statements to somebody (think loans) you will be revealing everything that you purchase and maybe there is some stuff on there you don't want to show such as certain types of magazines, or other personal paraphernalia. Keep your private stuff off your business receipts.

Next: What else do I need to get my "books" started?

So when should I start worrying about keeping "books"?

Business School 101 - Lesson 1:

From Alamo Bookkeeping Associates

Picture by freefoto.com

Alright, so I am asked the question, when should I start worrying about my "books". A lot of people don't even know what "books" are, they just hear the term from other people and in some movies, usually movies having to do with the mafia or other criminals.

Books, are accounting information. It basically measures how much money you make and how much you spend on your business. When should you start a set of books? Well, it kind of depends on how much activity you have. My advice is as soon as you hit over 20 transactions, that is, deposits to your bank or checks/debits, cash transactions concerning your business, you should probably start some bookkeeping, so you can keep track of what is going on, and don't have to rely on your memory as the months go by.

Next, what exactly is a set of books?