Accounting can be tedious for any business, but if your small business doesn’t keep tight books it can make your taxes a nightmare. Without a system for your business’s finances, a lot of things can slip through the cracks and end up costing you money in the long run. With a clear-cut process and some simple bookkeeping tips, you can get a better grip on your financial situation, and even increase your earnings. The goal is to get a simplified process created detailing your business’s finances. Having a method that combines your expenses, invoices, deposit records, and tax information can make your life as a small business owner ten times easier, especially as tax season rolls around.
Bookkeeping is a substantial part of any business venture. To make the process simpler, always save your receipts, especially those for transactions over $80. Having backup documentation of purchases for your business will help you when it comes to claiming deductions on your tax returns. Make sure you are correctly identifying and classifying your employees for tax purposes. Every month reconcile your bank statements with your books to make sure all the numbers add up. Back up all of your financial documents, preferably intangible, paper form as well as electronically, just in case of technical failure. Record all of your deposits as well so that you know exactly what is going into your business account, that way you are less likely to pay taxes on cash that is not income. Stay on top of your business bills and keep records on them.
Keep track of your reimbursable expenses so that you don’t end up paying out of your own pocket.
1. Go Paperless by Using Cloud-Based Accounting
Most accounting software will provide all the basic functions needed for any type of business bookkeeping – one of the most popular on the market right now is Intuit’s QuickBooks. Look for packages made for small business owners because they streamline the process by providing basic templates for your business-like invoices, deposit slips, and business account check printing. With the addition of cloud-based accounting systems, you can access your business information from anywhere. QuickBooks has a phone application for uploading receipts, tracking mileage, creating customer receipts and invoices, and quickly viewing your financials.
2. Find A Good Advisor
Having a good advisor on the bookkeeping to help you out at least once a month can become invaluable. They can teach you how to handle your books properly, answer any questions and fix any mistakes that might have been made. There are many options out there for accountants, so don’t worry if you have a small budget.
3. Keep Personal and Business Finances Separate
Try not to mix the two up, it will make your accounting much more difficult to handle. It’s a lot easier to keep accurate records if you’re only dealing with one type of account, so stay organized. You will save a lot of time by keeping these accounts separate as well.
4. Plan for Major Expenses
Set aside money for major expenses like inventory, office supplies, repairs, and maintenance. By budgeting for your small business in the coming years, you can save a lot of worry about dealing with these expenses in the future.
5. Set Aside Money for Taxes
If you keep track of your financial records properly you can be prepared for year-end taxes. Setting aside a little bit of money each month towards paying your small businesses taxes you won’t have to cut back at the end of the year or get a loan to pay your taxes, you will already be prepared.
6. Keep an Eye on Your Invoices
Late and unpaid bills can affect your business’s credit and affect your tax payments as well. Keep your bills organized and always pay on time. Keep track of your payment receipts just in case.
7. Keep Daily Records and Reconcile Bank Accounts Monthly
Double-check your bank accounts and daily records at least once a month. Reconcile your withdrawals and deposits in your account so that discrepancies can be spotted more easily.
8. Avoid Cash
Using cash it is hard to keep track of spending. You also lose track easily of write-offs because there is no record of purchases. By using a debit or credit card you can keep track of the amount spent, where it was spent, and when it was spent. This makes tracking your expenses much, much easier.
9. Set Up a Specific Time Each Week to Go Over Your Books
Giving yourself at least half an hour every week to go over your finances and make sure everything is in order. This way you will have a broad overview of your business every week and everything will be organized when tax time rolls around.
10. Check-In Monthly On Your Accounts Receivable
Having a client owe you money for services, especially at the end of the year, isn’t the same as having that money in your business account. Make sure you stay on top of your accounts receivable so that you are getting all the monthly payments you are owed. Without receivables, income dwindles. Regularly running an accounts receivable report will help you stay on top of past payments that you are owed.
Morgan & Associates offers both QuickBooks training, bookkeeping, and advisory services. Please contact us for more information