31.  +Explain+how+to+set+up+financial+recordkeeping+for+a+business.

31. Explain how to set up financial recordkeeping for a business.

Your first step in setting up an ongoing system is to get a baseline set of information for your business. You will need to estimate your startup costs and the money you have available on hand to start the business. The usual rule-of-thumb is that you should have enough money on hand to operate your business for a year. Some of the operational expenses that might be included are:

Down Payments on Property, Rent, Equipment Equipment Legal/Accounting Services Licenses/Permits Loan payments Marketing Office Space Professional Fees Remodelling/Installation of Equipment Salaries, including one for yourself Supplies Utilities

It is important to make as accurate an estimate as possible of your expenses in each of these areas and any other categories that you might anticipate. When in doubt, error on the side of estimating too high. You can be assured that there will be unanticipated expenses at some time during that first year. If you do not have this money available, you need to plan how you will meet these expenses. Your startup costs will be the subset of these expenses that you will need to get the business operational. Once you have this information in hand you are ready to tackle setting up your operational financial management and recordkeeping systems.