HCC Financial Guide
In this guide, you will learn how to implement accounting and basic fiscal practices that make it easy to meet federal and local tax requirements and standards.
Should I hire an accountant?
Accounting is a crucial part of every business that involves recording, tracking, managing and communicating a company’s financial information. Many business owners wonder if hiring a professional to handle their accounting is the right choice for them. The accounting process can be overwhelming, especially for a small business owner with little financial experience, and many companies struggle with it. Processes like applying for loans or filing for taxes become less daunting with an expert on your side.
What records should I keep?
Your financial records are crucial for tracking deductions, projecting cash flow, and more. According to the IRS, there are two financial statements you should keep a record of:
- Balance sheet, which consists of your business’s income and expenses.
- Income statement, which consists of assets, liabilities, and equities in business.
Additionally, you’ll want to keep track of your sources of income, deductibles, basis in the property, and any information you might need when filing taxes.
How do I find my break-even point?
You’ve reached your break-even point when your sales cover your expenses. To calculate it, use these steps:
- Step 1: Factor unit price (price per unit) minus variable costs (costs dependent on sales volume).
- Step 2: Divide fixed costs (costs independent of sales volume) by the amount found in step 1.
- Step 3: The result is your break-even point (in units sold).
This amount is unique to every business. Once you’ve reached your break-even point, you will know your business is financially viable.
How much should I save each month?
Individuals and small businesses should plan to save 10% of their income each month. This means setting aside 10% upfront from your payroll check or all company income.
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