Are you a small business owner who likes looking at excel sheets? But for those who aren’t good with numbers, accounting can be as appealing as a root canal. There are also business owners who would like to take control of their company’s finances but are too busy with day-to-day operations to do so. How you feel about small business bookkeeping services, it’s one of those tasks that a business owner can’t keep forever.
Tips for Hiring Professional Bookkeeper
- Hiring a professional bookkeeper, even for a few hours a week or a month can make a big difference.
- The duties of an accountant and bookkeeper overlap, but the bookkeeper is primarily responsible for recording and filing income and expenses.
- An accountant can also help with tax returns and strategic planning.
What are the Common Mistakes in Small Business?
- Mixing expenses and income is a common mistake in small business accounting and can cause major problems for your business in the future.
- Small business owners have a lot of details to keep track of.
- By mastering the basics of small business accounting and keeping track of your income, expenses and profits, you can free yourself from paperwork and cash flow problems and focus on the important task of growing your business.
- At first, you may be able to get by without doing any bookkeeping.
- But as your business grows and tax season approaches, you may feel a little lost. The penalties for incorrect tax returns and sloppy accounting are high, not to mention the time spent correcting mistakes.
- As soon as you decide to start a business, open a separate business account and credit card for your business. Not only will you have a separate account, but you can also give your business its own credit rating.
- Entering data into spreadsheets and manually reconciling the numbers is no longer an option.
- Use cloud-based accounting software and bank online.
- This allows you to sync your accounting software with your bank account, so you always have accurate and up-to-date data. Plus, with cloud technology, your important financial data will be stored in a secure location.
- Talk to your accountant about whether you can use off-the-shelf accounting software or if you need to customize it.
- Your accountant should be able to advise you and show you how to set up and use the software.
- If you put off keeping your books, you may end up with unpaid cheques, outstanding invoices or undelivered goods. Check your books weekly to make sure everything is in order.
- Before problems arise, hire an accountant or automate your accounting with one of the many accounting software programs available. This includes Xero, QuickBooks, FreshBooks and Wave.
What are the Necessary Parts of Business?
Accounting is a necessary part of any business. It helps you manage transactions, plan, prevent audits and provide the Internal Revenue Service (IRS) with what they need. Follow these proven small business accounting tips to achieve your long-term goals and increase your profits.
Save Value of Your Business
- Save valuable time by setting up separate bank accounts for returns and for savings when calculating your deductible expenses.
- Get into the habit, right from the start, of using separate bank accounts for your business and personal life.
- If you use your personal assets to invest in your business, you should keep accurate records of that investment.
- If you own a limited liability company (LLC) or business, having a business bank account and a business credit card can help limit your legal liability for business debts.
Look For Trends and Techniques
- At the end of each quarter, we conduct a thorough review of the accounts and financial statements.
- We will look for trends such as increases or decreases in sales, annual revenue, or increases in the number of delinquent customers.
- By consulting with your accountant, you will be able to see the big picture and better prepare for future financing needs, such as purchasing new equipment or moving to a larger facility.
Need to Check Your Business Expenses
- There are a number of changes to the tax system for 2018 and you should consult your tax advisor to see what types of expenses you can deduct next year.
- Scanning and digitizing your receipts will save you a lot of time. Also, be sure to use a credit card for all your business purchases so you can track your expenses.
Deduct personal expenses
- Generally, you cannot deduct personal expenses on your business tax return.
- If you use your business for both business and personal purposes, such as your car or home office, the deduction applies to the portion of your time used for business purposes.
- Deductions for any other personal expenses will not be allowed on your tax return. The penalty is a maximum of 75% of the additional tax liability.
Check Employees Check and Balance
- Cloud-based time tracking software allows your employees to enter and use their time from their smartphones, tablets or computers.
- Not only does it save you the hassle of the process, but it also makes your life easier by automatically recording overtime and holidays. There is a time tracking software for almost every industry.
- If you choose a solution that integrates with your accounting software, you can easily calculate your payroll.
- You can maximize your depreciation and tax deductions by recording and classifying each expense and tracking your cash flow
- Dollars add up quickly and you can easily run out of money. If you use a credit card for all your purchases, you won’t have a wallet full of paper receipts.
- It also means you can get bonuses and refunds for the money you spend. Your accounting software will also keep copies of the receipts and bills you’ve paid.
- If you can only use cash, keep a digital copy of your receipts in your accounting software.
- The type of accounting method you choose will affect the amount of time you spend recording your expenses and income.
- It’s easy to lose track of money coming in, such as loans and sales, but you need to keep track of all your receipts. If you don’t, you’ll pay less tax and avoid penalties from the IRS. As with expenses, your method of accounting will determine when you record your income.
- Professionals keep records up-to-date and organized and have a better understanding of potential commissions, loopholes and additional tax deductions. Knowing the various IRS rules and requirements can help you gain tax benefits and save time.
- In fact, the average small business owner can save about $320,000 a year by outsourcing their accounting work to a professional. Make sure your accountant speaks in a language you can understand.
- If your customers don’t pay you on time, your company’s cash flow can quickly dry up.
- Keep track of your accounts receivable and immediately contact customers who don’t pay on time to give them a boost.
- Even if a customer is having financial problems, having a payment plan in place will ensure they receive at least some of their money.
- To avoid difficulties, plan ahead and set aside funds for all scheduled tax payments.
- Make your payments on time to avoid paying penalties.
- The sales tax calendar on the IRS website can be synced with your own cloud-based calendar so you never miss a deadline.
- You can also send reminders one or two weeks before the due date.
- Accounting software is a great tool for most small businesses. You can use it yourself or, if you employ a bookkeeper or accountant, you can give them secure access.
- QuickBooks is the most well-known accounting software, but there are now smaller competitors.