Bookkeeping Tips Anyone can Use
Take these ten bookkeeping tips and turn them into peace of mind.
Do you want tax time to be a total nightmare? No! Of course, you don’t. But I bet you’ve had a few tax time nightmares in your life. Well, no more!
How will we help you defeat the monster that is small business bookkeeping to ensure a smooth and easy tax season? We will give you a list of tips that you can turn into a system for keeping things neat and organized. When tax time comes, all you will have to do is collect all the work you’ve been doing in small chunks throughout the year and compile it. Easy!
Bookkeeping for a small business is about building routines that help you to prevent things from falling through the cracks. That way, your earnings stay earnings and don’t fly out the window every tax season.
So, we have to create a process that details your business finances, a method that will combine your invoices, deposits, expenses, and tax information to make your life much easier.
Before You Get Started, Get Organized
Bookkeeping is one of the most essential parts of any small business venture. The more we can simplify and organize the process, the easier it will be. You can take some time to accomplish these basic steps, which will make it much easier to achieve the ten tips that we list below.
Save all your receipts, which is especially important for all transactions that are over $75. Having clear documentation of all purchases will help a lot when claiming deductions on tax returns. You can also keep track of your reimbursable expenses so that you don’t pay for those things out of your personal bank account.
Make sure to identify and classify your employees for tax purposes correctly. It’s also essential to reconcile your bank statements with your books to ensure that the numbers add up every month. It’s essential to keep all records and documents backed up both physically and digitally in an offsite location, either weekly or monthly.
It’s also important to keep all your bills paid on time to avoid late fees and hits to your credit.
These are just the basics that everyone should adhere to whether you are a brick-and-mortar store or an online eCommerce site.
Now, let’s get on to the tips!
10 Bookkeeping Tips You Can Use Anytime
Find a Trustworthy Advisor
Having a good advisor who is familiar with your books to help you out at least once a month is a critical and invaluable part of keeping your books in tip-top shape. They can straighten you out when you aren’t sure what to do, answer any questions that arise, and take some of the heavy lifting off your plate to free up your time. Here at TenKey, we are excellent at accounting review for small businesses and can help you anytime if you give us a call at 971-220-6416.
Go Paperless and Use Cloud Accounting Software
Most accounting software out there right now has all the basic functionality and features that you might need at a reasonable price. The most popular option right now is Intuit’s Quickbooks Online. You will want to look for a package that is fit for a small business. Not only are your books available anywhere (on your phone or your laptop), it’s also backed up to the cloud. We have some opinions on what suites fit specific business models best, and you can call us for our views on those.
Plan for Big Expenses
Nothing can wipe out your month’s spending power like an unforeseen big expense, which is why it’s critical to plan ahead on things like inventory. Budgeting for big-ticket items regularly can help you avoid moments of scarcity when you need the money the most.
Keep Business and Personal Finances Separate
As soon as you open your business, apply for a business savings and checking account at your local bank or credit union. This will avoid big mix-ups in the future and keep your personal finances safe and secure from your business finances. This is also a good idea because it allows you a chance to forge a meaningful relationship with a local bank or credit union, which can be invaluable over time.
Watch Your Invoices Closely
Late and unpaid bills can hurt your business credit and hurt your tax payments as well. Keep all bills neat and organized, but most importantly – keep them paid. If you can keep track of your payment receipts, too, that’s great.
Set Aside Money for Taxes
If you are diligent in keeping track of your financial records, you will probably have a good idea of what you should owe when tax season comes. If you put aside a little bit of money each month to taxes, it won’t hurt nearly so bad when taxes come due. Nothing can hurt like having to take out a loan just to pay your taxes, so stay on top of things to avoid that at all costs.
Avoid Cash
Cash is hard to track, which makes it easy to lose track of when spending it. This can make it hard to know if you bought something that can be written off.
Keep Daily Records & Reconcile Bank Accounts Regularly
Double check your bank accounts and daily records once a month. This is just doing your due diligence to reconcile your withdrawals and deposits in your account.
Double Check Your Accounts Receivable
Making sure that you collect what you are owed is basic business good sense. If you miss what you are owed one month, there is a chance you miss it the next month, and before you know it, you have done a ton of free work and have nothing to show for it. Running a regular accounts receivable report will give you a good idea of what you are owed and what you need to collect.
Go Over Your Books Once a Week Like Clockwork
Set aside a specific day of the week where you always do your bookkeeping chores. Making this a habit will result in your books looking organized when tax time comes and will save you a massive headache more often than not.
If you are ever in need of bookkeeping assistance, please give us a call at 971-220-6416!
