Navigating 2024: Founders' Guide to Essential Accounting Practices

  • Accracy
  • 3rd Feb, 2024

The year is already in full swing, but it's not too late to incorporate some new best practices for 2024, especially in your accounting. Utilizing specific tools and keeping essential information in mind can significantly simplify your life, both now and when tackling your 2024 tax filings.

Whether your goal is to enhance your accounting for increased tax savings this year or simply to steer clear of unexpected challenges, we've got you covered. Our team of accountants has curated some advice tailored to your tech startup. Implement these three tips to stay in control of your accounting and anticipate upcoming changes in 2024.

Navigating 2024: Founders' Guide to Essential Accounting Practices

Prepare for the Transition from QuickBooks Desktop

QuickBooks has maintained its position as a leading accounting software for businesses of all sizes. Historically, companies could choose between the online, subscription-based QuickBooks or the one-time purchase desktop version. However, QuickBooks is now in the process of discontinuing its traditional desktop version.

The desktop version is no longer available for purchase, except for the Enterprise version, which now requires an annual subscription fee of $1,830. QuickBooks plans to stop selling certain desktop software on July 31, 2024, including QuickBooks Desktop Pro Plus, QuickBooks Desktop Premier Plus, QuickBooks Desktop Mac Plus, and QuickBooks Desktop Enhanced Payroll.

While existing desktop users won't lose immediate access, QuickBooks recommends transitioning to QuickBooks Online. On May 31, 2024, QuickBooks will officially discontinue its QuickBooks Desktop 2021 software, affecting technical support and integration with services like QuickBooks Desktop Payroll and Payments. QuickBooks will also cease security upgrades to the desktop software on May 31.

Although QuickBooks Online requires a monthly subscription, it offers a feature set similar to the desktop version. Transitioning is relatively straightforward, with QuickBooks suggesting that most companies can complete the process in less than an hour. If you wish to safeguard against future discontinuations, consider transitioning to QuickBooks Online for remote accessibility and real-time collaboration.

Stay Informed on Lease Accounting Requirements

Lease accounting has undergone significant changes in the last five years, driven by updates to generally accepted accounting principles (GAAP). Starting in 2022, companies must report all leases exceeding 12 months on their balance sheets under ASC 842. Additional changes, such as GASB 96, impact reporting for subscription-based information technology arrangements (SBITAs).

Given these shifts, it is advisable to report all leases, including equipment and real estate, on the balance sheet. Your accountant can offer guidance on these requirements. Pay special attention to equipment leases, which can now be categorized as operating or finance leases, each with its own advantages and considerations. Discuss these classifications with your accountant to ensure accurate categorization.

Implement Effective Recordkeeping Practices

Many companies face challenges during tax filing season due to inadequate recordkeeping. Relying on archives to gather necessary information not only burdens your team each spring but may also result in missed tax savings opportunities.

For instance, meticulous recordkeeping is crucial for claims like the R&D tax credit. Without proper documentation, passing the four-part test may become challenging. Develop a plan for collecting and organizing required documentation throughout the year based on your accountant's requests during the 2023 tax filing. This proactive approach will streamline your 2024 tax filings and potentially enhance tax savings.

These suggestions provide a foundation for accounting success in 2024. For personalized guidance tailored to your tech company, contact our specialized team. We offer expertise in bookkeeping, accounting, and tax filing services to support your startup's success.

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