Not all business owners choose to incorporate. If you’re an independent contractor or run your own small business, you’ve probably wondered if it’s the right decision for you. Regardless of whether you choose to incorporate or operate as a sole proprietor business, keep these tips for unincorporated business owners in MA in mind.
Keep Separate Accounts
When it comes to tracking expenses and keeping the books (be it credit cards, bank accounts, business expenses, etc.) it’s best to keep separate accounts and to record debits and credits independently. Not only does this make it easier to track expenses in the event of an audit, it also creates a system of checks and balances – helping to reduce mistakes.
Use Accounting Software
Again, in an effort to reduce mistakes and keep things organized, you should be using some form of accounting software*. In addition to tracking income and expenses, it provides you with a toolkit for sending professional-looking invoices, statements to clients, and other business related documents. This also helps to establish yourself as a professional business.
*For example, Wave Accounting is an online accounting tool that equips you with the aforementioned services and gives you with the ability to accept payments via credit card.
Keep Good Records!
This follows along with the ‘easier to track’ benefits of keeping separate accounts – especially when it comes to potential audits. Make sure you have copies of all receipts and anything related to business expenses. You’ll want to ensure that everything is accounted for with the proper documentation. Even better, organize everything by expense category so that you are already prepared for taxes and in the case of an audit.
Get Tax Advice
Seeking guidance with taxes should be a high priority for unincorporated business owners. Your best bet is to consult with an accountant or business attorney to learn more about what tax benefits are available to you and the best way to maximize your federal filings. Taxes can be a tricky issue for both unincorporated and incorporated businesses. You’ll want to know the pros and cons and how to take advantage of your specific situation.
More Tips for Unincorporated Business Owners in MA
Depending on your situation, you may not necessarily need to incorporate. Following these tips for unincorporated business owners in MA should help you establish your business as a professional entity and streamline processes for a successful practice. Should you require legal advice on your business, including deciding whether to incorporate, give us a call for a free consultation.