Oftentimes bookkeeping takes a back seat to the more pressing ins and outs of your small company. Bookkeeping is not your drive and passion, and it feels like a headache for you as a small business leader. Many owners play catch up with their monthly finances and pay for those mistakes during tax season. When bookkeeping is completed correctly it will save you time and can become one of your business management strengths. With fewer mistakes, you can say goodbye to those last-minute scrambles at the end of the year.
You Have A Lot On Your Plate As A Small Business Owner
Small business owners usually work at least 50 hours a week, so putting the bookkeeping off for when you are less busy never happens. You always have a new fire to put out, a growth opportunity to pursue, or a task requiring your unique expertise. Do not let your bookkeeping fall behind as it can affect your business’s financial health. To avoid the accounting backlog, break them up, and schedule your tasks. You might fear making a mistake, and that only makes procrastination feel more enticing. When it comes time for end-of-month, end-of-quarter, or end-of-year accounting, you will thank yourself for keeping up with reconciling sales against receipts or invoicing clients and updating inventory.
Have A Corporate Credit Card And Use It For All Expenditures
If you are ever audited, you will need all receipts for expenditures. The IRS does not require documentation for expenditures under $75 except for lodging so you may not think you need those receipts. Establish some smart habits for any time you use your corporate credit card. Set aside an email folder for tracking your digital receipts and keep your paper receipts. Digitize and label your physical receipts. Organize all by month so you can track them for monthly accounting purposes.
Always Reconcile Your Bank Statement
Balancing your checkbook, which is also known as reconciling your account, is basically making sure that the records you have kept for your financial transactions match those the bank lists on your statement. When you perform bank reconciliation, you are ensuring your business records have captured all cash transactions accurately. It is also an opportunity to double-check your bank’s records to identify any errors in the transactions in your bank account. Formally reconciling your bank statement lets you detect errors. count bank fees toward your expenses, find fraudulent charges, and track accounts payable and receivables. Match your bank statement up against your general ledger and get to the bottom of any discrepancies monthly.
If Bookkeeping is Taking Too Much of Your Time And Energy, It Is Time To Call A Professional
When you first open your business, you might be able to run everything by yourself. Eventually, hiring a bookkeeper will become a vital step to help ensure continued growth for your business. Tasks that could take you three or four hours, an experienced bookkeeper can do in one, saving you time and letting you get back to doing what you love. When your business starts to grow, your workload tends to grow in tandem. Trying to run a business by yourself leads to additional stress. As your business grows, a dedicated bookkeeper can help reduce that stress. It’s important that your invoices and receipts are managed properly. Bookkeepers help keep track of all of your organization’s purchases, expenses, and sales. Bookkeepers can help you with tax preparation throughout the year, so your business will be ready for tax season. Besides helping you with your business’s current taxes, bookkeepers can also help you with any retroactive bookkeeping your company might need. Hiring a bookkeeper will allow you to focus on the other important aspects of your business and give you peace of mind knowing that it is being done correctly.
A Few Tips To Keep Your Bookkeeping In Order
When work starts to get busy, things sometimes fall through the cracks. Invoices can be left unpaid, and receipts go unaccounted for. This leads to outdated books and statements, which can cause unpredictable business cash flows.
- Keep your finances separate: Have a corporate credit card and business bank account. When you love what you do and do what you love, the lines between business and pleasure can blur. With separate accounts, it will make it easy to track your business expenses and avoid miscategorization.
- Keep accurate records: If you’re in business, there’s no required method of bookkeeping you must use. However, you must use a method that clearly and accurately reflects your gross income and expenses. The records should substantiate both your income and expenses. If you have employees, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later. It is crucial to keep a complete record of your financials for 3 years. You should keep records of your own and your family members’ healthcare insurance coverage. If you’re claiming the premium tax credit, you’ll need information about any advance credit payments you received through the Health Insurance Marketplace and the premiums you paid.
- Keep your books accurate and up to date with the help of a professional bookkeeper: Know when to get help. Bookkeeping is perhaps one of the most popularly outsourced services for small businesses. And that is not surprising. After all, bookkeeping and accounting are two of the most arduous, crucial, and time-consuming tasks. It takes actual professionals to get them right so spending a little extra on outsourcing the service is more cost-efficient than the costs that come with bookkeeping and accounting mistakes.
As a small business owner, you wear many hats. Focus on the hats you like wearing and get rid of your accounting with a professional bookkeeper.
About J&S Accounting
J&S Accounting offers full-service bookkeeping, payroll, and consulting services. Our team understands that well-organized financial records help your business run more efficiently. We are a woman and minority-owned accounting practice improving the fiscal management of small businesses and nonprofits in Savannah, GA, and nationwide.
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