If your small business isn't accurately recording financial transactions, you may be in for a nightmare at tax time. Here are 10 quick tips for all small business owners to ensure their bookkeeping is on track.
1. Use cloud-based accounting and go paperless.
Our favorite cloud based accounting system is QuickBooks. With features that will fit any type of business, Quickbooks the gold standard when it comes to bookkeeping and accounting. Going paperless will save untold hours of time and frustration and allows your business to easily outsource bookkeeping tasks, which saves money.
2. Enlist a second set of eyes on your finances.
Partnering with a bookkeeper who holds an accounting degree is a wise move. They can keep tabs on your payroll and train you on how to handle your books correctly. They can also answer your bookkeeping questions and fix errors that have been made.
3. Never mix personal and business finances.
Keep your personal and business finances separate to make accounting much easier for all parties involved. When personal and business financials start mixing, it can be difficult to keep accurate books. It may make sense to have your business accounts at an entirely different bank if you're worried about grabbing the wrong debit card or check book. Whatever you do, don't make personal purchases with business accounts.
4. Plan ahead for big purchases.
By budgeting ahead of time, big purchases like building or equipment maintenance, inventory, or new office equipment, you'll save time worrying about how to afford them. It's always a good idea to be prepared for the expected and unexpected.
5. Plan ahead for taxes.
If you have a professional bookkeeper on board, you've already taken a step in the right direction. Make sure you're planning ahead for tax time by setting aside money each month that's allocated specifically for taxed. You don't want to be hit with an unexpected tax bill that you can't afford.
6. Pay your invoices on time.
Unpaid invoices can not only affect your credit, they can create issues at tax time. Maintain good records of receipts for payments and stay organized to make sure you're on top of your invoices.
7. Reconcile monthly and keep an eye on your accounts.
By reconciling monthly, you can spot mistakes and correct them immediately. Keeping an eye on all of your business accounts by reviewing frequently will assure errors won't get out of hand. Hate reconciling? Outsource to a bookkeeper!
8. Never use cash.
It may be tempting to use cash occasionally for business purchases, but it makes bookkeeping difficult. When you only use a credit or debit card, you have multiple records available proving exact purchase amount(s), as well as the time, and date of purchase. This makes like easier for everyone involved with your small business bookkeeping.
By consistently implementing these 8 quick bookkeeping tips, you'll be spending less time in your business and more time ON your business. For comprehensive bookkeeping solutions for your small business, contact The Bean Counters Bookkeeping.