Whether you’re a seasoned entrepreneur or just starting your small business or side hustle, you may have already realized that bookkeeping is a necessary part of running your business.The process of keeping full, accurate and up-to-date business records may not rank as high as other business activities. However, it’s one of the most successful businesses’ secret to making the most out of tax season.
Keeping your business records in tip-top shape not only helps you input the right amount of business revenue and expenses. It also helps you side-step and avoid MAJOR tax penalties, in addition to saving you time, energy and stress! It also helps to meet applicable quarterly sales tax, as well as federal and state payroll tax obligations. Besides, if the IRS or state tax authorities ever decides to audit your company, having accurate bookkeeping means you’ll not only be ready, but that you’ll also pass the test.
Here are 7 bookkeeping tips to make tax time much easier to handle:
Planning is key!
The best way to be ready for any upcoming business expenditure is to plan ahead. In the same way that you would plan for equipment, inventory or maintenance expenses, you have to plan for annual taxes. This could be as easy as setting us money aside on a monthly or quarterly basis to cover taxes.
Schedule your time
Bookkeeping can be a tedious task, and you may be tempted to leave it to the end of the year. Instead try and schedule some time on a weekly or monthly basis to update your books. Stick to a more or less strict schedule to stay current with your finances.
Don’t mix business and personal!
Keep in mind that business expenses are tax-deductible. As such, make sure to separate your personal from your business expenses to make it easier on yourself. If you happen to use your business accounts or credit cards for personal expenses, remember to track both sets of expenses as accurately as possible.
Have a system to track your business expenses
Using a credit or debit card to track your expenses can be a great way to ensure costs incurred are true business expenses. Keep this in mind when you’re tempted to use cash, which can be challenging to track over time.
Invest in Great Software
It’s important to invest in reliable bookkeeping software that can save you significant time and help you input expenses and cash flow more accurately. You can use accounting software for everything from tracking invoices and budget hours, to customizing invoices. There are countless options for bookkeeping software out there, which also may be customized for the industry of your choice.
Check your invoices!
It can be easy to lose track of your invoices over time. So make sure to keep track of them by running customized reports through your accounting or bookkeeping software, and determine which ones still need to be followed up on.
Invest in a Professional!
While you may be to handle a number of bookkeeping tasks yourself, in some areas you may have to invest in a pro! Whether you hire an accountant to handle your taxes or payroll, or a financial advisor to give you the best tips on your industry, investing in a professional can reap great rewards for you and your business.
What tips would you add to this list?
To Your Success,
The Corporate Sis.
Author: Solange Lopes
Solange is the founder of The Corporate Sister, as well as an author, entrepreneur and CPA. She’s passionate about helping women do work they love, build fulfilling careers and living life on their own terms.