Strong accounting knowledge is needed when setting up a business and keeping it compliant with taxation codes. This article will explore the three critical aspects of entrepreneurial success: business plans, commercial taxation, and continuing education.

Business Plans

All startups and small businesses need solid and succinct business plans to secure loans, acquire partners and strategically plan for success. Standard business plans include an executive summary, legal structure, market analysis and product or service description. They will include pro forma financial statements and what working capital and capital investments are needed. Many potential business owners can’t spare the resources to hire an accountant until they open their doors, so they will need to have the ability and knowledge to prepare pro forma balance sheets, income statements, and statements of cash flows.

Commercial Taxation

One of the biggest reasons why startups fail to maximize their potential and endanger their business stability is a lack of taxation knowledge. The IRS’ Internal Revenue Code establishes the rules for income, payroll, and reporting. State and local governments also decide how sales, income and property transactions will be taxed. Entrepreneurs must realize that they are the legally fiduciary and responsible party for all these taxes, so they will be held personally by different government agencies. This is why most small- to medium-sized business decrease their risks through outsourcing to accounting professionals.

The Need for Continuing Education

Business majors and college students who want to start their own companies often joke that they don’t need to learn accounting because they can simply hire someone to handle it for them. Forbes magazine asserts that outsourcing finance and accounting functions will drive efficiency, streamline processes and benefit the company. However, it is imperative that entrepreneurs and small business owners still understand basic tools and concepts. Entrepreneurs need accounting knowledge and financial understanding more than any other business major. Entrepreneurship goes beyond growth and innovation because it requires the accounting skills to build sustainable companies.