The foundation of your business is based on the state of your business’s financials. Following proper bookkeeping protocol can save you time, money, and energy – guiding you towards financial success. Here are some easy-to-follow bookkeeping tips to set you and your business on the right path.
This is crucial. There are many reasons why your small business may be audited by the IRS. For example, audits can be triggered by claims of personal vehicles being used for your small business’s needs. The commingling of business and personal finances or expenses can cause the IRS to start looking into your personal accounts. Keeping your business accounts separate from your personal accounts is crucial for avoiding a complicated tax season.
Credit card or bank statements are NOT proof of purchase in an audit. Itemized receipts are mandatory. Your business’s taxes come from the difference between your revenue and deductions, your taxable income. Keeping track of your expenses for your business can help maximize your deductions, therefore reducing your taxable income. While not everything you buy will be considered a business expense, more will qualify than you would think. For example, fees spent on travel for business events can count as a business expense. However, unless an itemized receipt can be provided, the entire trip may be deemed as non-deductible. If you’re not sure if an expense will count as a business deduction, save your receipt and ask an Alloy Silverstein advisor.
As a business owner, you always have many responsibilities on your plate. Using an automation software will allow you more time to focus on your daily responsibilities and needs of your business. Proper bookkeeping can be an extremely time-consuming task. Automation will save you time and give you peace of mind that your books are always up to date.
There is often no paper trail when it comes to cash payments. To keep accurate books for your business, you will need to document cash payments on your own. There are many ways to do this. You can use a plain notebook, excel spreadsheet or a current cloud software to track your cash payments. Using one of these methods will keep your records current and you can keep notes regarding what these payments are for. Continuously cross-checking receipts and cash flow will keep your books accurate.
When tax season comes around, you will be asked to pull out your receipts and business records from throughout the year. The last thing that you will need amongst a busy business and crazy tax season is panic because you cannot find the specific paperwork you need. Maintaining organized and well-kept records throughout the year will save you time and give you peace of mind when tax season rolls around. Plus, you will keep your accountant happy.
Automation bookkeeping software can be great – but there is always the possibility of technological malfunctions. Trusting an experienced professional to keep your business’s books gives you the extra time to focus on your business while also knowing that you have a trusted partner keeping your books accurate and current.
If you have any questions about your business’s books or proper bookkeeping techniques to keep your books up-to-date, contact us to get in touch with an experienced professional today.
Director of Small Business Services
Janine works one-on-one with small businesses who outsource their bookkeeping and business financial reporting to a knowledgeable, efficient, and trustworthy advisor.
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