Every Small Business Needs This In Their Bookkeeping
There are a lot of basics to cover when it comes to your bookkeeping. You need software, you need your reports and you need your budget and cash flow. You can have all of those things, but if you don’t have Organization - you can throw ease with your bookkeeping out the window.
Bookkeeping does not have to be stressful.
If your bookkeeping is organized, it makes filing your taxes, planning your budgets and making business decisions so much easier. At the time of this article, we are in the midst of tax season, the time of year when small business owners scramble to get their stuff together for their accountant to file taxes. The stress of this time of year is often due to lack of preparation and disorganization. We get it, you have a lot on your plate and bookkeeping, dealing with your numbers, and managing the financials end up being put on the back burner.
While we can’t change what happened last year, you can change what you do to stay organized moving forward because you want your future tax seasons to be easier. Simple organizational practices will keep you confident about your cash flow and have you being prepared in advance of most of the other small business owners your tax accountant works with. Trust us, they will love you for it.
Here are some tips to help you stay organized with your bookkeeping.
Tip #1: Review your books monthly at minimum.
Bookkeeping isn’t an end of the year affair. We don’t know about you, but we don’t always remember why we had an expense a year ago. You should have your accounts reviewed, reconciled and categorized at minimum on a monthly basis because you will have more accuracy in your bookkeeping. Also, you will have real time information when running your business.
Even if you have a bookkeeper, as a small business owner, you need to do a review because ultimately you are responsible for submitting the tax documents to the government. This is why we do quarterly reviews with our clients as it keeps them accountable and empowers them to stay organized.
Tip #2 Use receipt capture for your bookkeeping.
Let’s say you are out at the store, getting office supplies. The lovely cashier hands you a receipt. Before you stick that receipt into the black hole of your wallet or glove box, we recommend you whip out your cellphone, make a note on the receipt as to what the expense is for and take a picture with your Quickbooks app. With one picture you have saved your receipt and connected it to your bookkeeping, keeping you organized and making it easy if ever you were audited by the IRS to show proof of payment.
Tip #3 Prepare your W-9 ahead of time.
Every year we see people send out a mass w-9 request to people they have hired as contractors, often wasted energy as they send requests to businesses that do not need a 1099. They may struggle finding the contractor again, or tracking what they paid them. When you hire a contractor, find out what type of business they have immediately.. If they have an SCorp, you do not need to get a w9 for them. If you do need to 1099 them, send them a w-9 as part of your contract process so you can easily enter the amounts at the end of the year and have Quickbooks send the 1099’s out for you.
Tip #4 Keep your business and personal finances separate.
One of the most challenging parts for small business owners is keeping their expenses straight. It makes more work for their bookkeeping when they mix their personal and business expenses together. So use a business credit card for your business expenses. If you make a mistake, notify your bookkeeper right away or open up your Quickbooks app and update the expense to properly reflect if it was a personal or business expense.
Good news is: You don’t have to do all the bookkeeping on your own!
There is a lot to do when you are running a business. You do need to keep things organized so your books are accurate, but you can partner with a bookkeeper to help you with the process. These are our some of our top tips we give to our clients who own small businesses to help them feel confident and organized in their bookkeeping. If you want to discuss how a bookkeeper can help you save time and money, click here to book an initial consult with one of our team members.