Accounting can be one of the most formidable obstacles that a small business owner can face. You know that it is critical to keep accurate financial records for your business. You know that it will make things easier at tax time if you do. Still, the complications of small business accounting are easily enough to make you Google accounting companies near me. That might not be a bad idea either.
Outsource Your Accounting – Perfect for Startups, SMBs & Mid-Sized Corporations
Outsourcing accounting services for SMBs can be a good idea for many owners. It can be relatively easy to keep the books at first but as your business grows it can become harder to keep track of everything. It might be time to hire a professional accountant and yet money is an issue. Accountants can cost a lot of money. Your time is valuable and so is your money. In this article, we will look at seven small business accounting tips to save your time and money.
Keeping constant track of your income is critical to small business accounting. You don’t want to get penalized by the IRS for under reporting your income on your return or underpaying your taxes. It is much easier to avoid such penalties if you establish good accounting methods to track income.
You also need to keep accurate records of your expenses. It is an important part of accounting for small business owners. You need those records to establish and back up your deductions at tax time. A couple of tips for tracking expenses; use quality accounting software to track the cheques you’ve cut and invoices you’ve paid, use a credit card instead of cash so you don’t have a shoe box of cash receipts to sort, and keep digital copies of receipts when you do have to use cash.
Every small business owner needs to be vigilant about separating their business and personal expenses. The key is to keep a business bank account and a personal bank account. Likewise, you need to keep a business credit card that is only for business expenses. That makes it easier to figure out your deductions at tax times. You cannot declare any personal deductions on your business tax return and keeping separate accounts makes it simple to avoid that.
One of the fastest ways to waste time and make a mistake when doing small business accounting is to procrastinate on keeping the books. You need to set aside time regularly, ideally at least once a week, to organize and enter any income and expenses. Be disciplined about that and you will save time and effort at tax time while avoiding errors on your return.
Be vigilant in collecting on any invoices. Send them put promptly; issue courteous reminders when they are coming due, and think about offering early payment discounts to ensure your customers pay promptly. These methods make accounting for small business owners easier by saving time spent searching your revenue account and receivables listing. They also help avoid overpaying on your taxes.
Would you try to buy a VCR and try to find a video store to rent a video tape if you wanted to watch a movie? Of course not, because that is an outdated and inefficient method of watching a movie. Streaming services make it easy to watch a movie in the comfort of their home. Likewise, using modern accounting software (like QuickBooks) makes it easy to handle small business accounting. The software will even link to your bank account or credit card to make tracking income and expenses simple.
As a small business owner, it might seem impossible to hire a professional accountant. Just not in the budget. However, try to look it a different way. A professional accountant can free you up to take care of the many other responsibilities that you have. That is important to the success of your business. Also, you do not have to hire an accountant or bookkeeper full time. You can hire a professional for just a few hours a week or month (depending on your accounting needs) and it will be worth it. They will keep your records orderly and help you comply with IRS regulations at tax time. Particularly if you struggle with keeping your accounting up to date or need help with what deductions to take, it is well worth it to hire an accountant or bookkeeper for SMBs.
Related Blogs
What to Look for While Choosing an Accounting Firm?
5 Accounting Mistakes Most SMB Owners Make & How To Avoid Them?
Trouble Tracking Your Business Expenses? Try QuickBooks
The Roles & Importance of Professional Accountants in Running Any Business Smoothly
10 Accounting Services Your Business Must Have
Why You Need Bookkeeping Services for Your Small Business?