Always start by making sure you have created a NEW Business Account
It’s easy to lose track of your funds if your personal account is combined with your business account. You have to search through many statements just to find a little business and financial information that you need. So start by splitting your personal and business accounts.
Open a new bank account specifically for your business finances so that all your business dealings are separate. No more confusion when it’s time to do your books as you will easily find your business information when needed.
Always set a Budget for Tax Purposes only
You need to set a budget for your taxes as you go along as it’s always hard to pay your taxes in bulk or at once. It is always good to set a bit of your income on your savings account that will help you pay off your taxes and that you will always have peace of mind that you have money always set aside for tax purposes.
Organize your records as much as you can
You know how cumbersome searching through one account and the other, how about those receipts and deductions, not having an organized record keeping strategy will bring you much headaches when it’s time for tax season. Having records organized also allows you to see the inner running of your business, if you remain profitable or you can tweak your budget anytime.
Not only are you saving a lot of time, you won’t also have to catch up a lot on tax deadlines and you exactly know where to look for your records.
Make it a habit and do not do it on a whim or in one go. Make sure that you find an organized strategy that works for you, whether it’s filing cabinets or storage boxes.
Expense Tracking
These is where most difficulty lies, tracking your business expenses. One strategy is to have a Business Credit Card or Debit card that you can use for all business expenses so that you can keep all your expenses together and track it easily. You can always categorize every expense like travel expenses, car mileage and consumption on meetings and all the costs that go with it.
Keep a Daily Record
It seems cumbersome to do, but if you do keep and maintain a daily record, you can review it to keep it accurate and you won’t easily forget details. It’s easier to remember the current financial condition of your business if you do so.
Once you have a system that works for you, stick to it and keep accurate every day. By the time you are filing your tax returns, you’ll see that it does help a lot, and I mean a lot!
Audit Trails are a must
Like and Hansel and Gretel leaving bread crumbs, when doing your book manually, it’s always advised to leave an audit trail. You can quickly retrace your financial activities by doing so and record keeping will be much easier. This is where software can be considered so that you can do this easily.
All you invoice will be in order and you can retrace every step even for minor errors. This is what we mean when we say leaving an audit trail.
Take Note and Be on Top of your accounts receivable.
Customers that pay late is always going to happen, it can leave a negative impact on your cash flow. Although you cannot completely get rid of these situations, make sure you pay attention to these records like when it’s due and when it’s overdue, consider collecting right away. You can always work out a plan to get the money that is owed to your business, but the longer you ignore it, the more it becomes impactful on your cash flow and the more that the issue piles up.
Note of your Tax Deadlines
Always put it on your calendar. It is always a stressful time, so take time by adding it to your calendar and set of priorities. If you keep the tips above, you will find it easier when the time comes. So take note of the tips prior to this about keeping a good and accurate record and you will have less stress on your part when tax season comes. Upside to having this set in advance is you can avoid tax penalties.
Software can be a solution
If you have been avoiding this method, maybe it’s time to consider it. Most government encourages businesses to Go Digital! In the near future, all of your tax reporting, record keeping and even filing will all be online, so it’s time to consider this.
Plus, most apps give you a nice visual report of your income, expense and every record that you need reports to. It would be much easier to keep your financial record. Yes there is a learning curve and you might feel it’s a burden. But once you get into it, you will really appreciate it. Most apps nowadays are pretty user-friendly and have features to easily teach you the process as you go along.
Less Hassle? Hire KDF Bookkeeping and Well help you!
You don’t need to feel overwhelmed with using your bookkeeping software or your bookkeeping as a whole. KDF uses several apps that will help make doing your books a breeze, giving you more time to enjoy live and have peace of mind that your books are well-taken care of.