Working The Numbers: 4 Easy Accounting Tips For Your Business
Did you know that more than 25 percent of entrepreneurs spend in excess of 100 hours per year doing their federal taxes?
Since most of these small business owners work between 50-60 hours per week, that’s the equivalent of two weeks without getting any business-related work accomplished. That can prove disastrous for entrepreneurs.
If you’re like most small business owners, you didn’t become an entrepreneur because you wanted to spend all of your time weeding through paperwork and functioning as a DIY accountant. Fortunately, you can take steps to streamline these processes. Read on for four easy accounting tips that’ll let you stop focusing on small business accounting and start running your business.
Get a Handle on Personal Versus Business Expenses
One of the hardest things for new entrepreneurs? Separating personal and business finances. Yet, it remains a crucial step in accounting for small businesses.
Separating personal and business finances. Yet, it remains a crucial step in accounting for small businesses.
Because, more often than not, every extra scrap of income an entrepreneur receives gets re-invested into their budding company. But you must maintain dedicated accounts for your private and entrepreneurial expenses. This will help you gain some autonomy from your company, which is crucial to your long term mental health and well-being.
It’ll also help you keep better track of expenses when tax season rolls around.
Track All of Your Expenses
Many business owners fall into the rabbit hole of forgetting to track their expenses throughout the year. Then, at tax time, they sit staring down an intimidating pile of receipts completing clueless when it comes to categorizing a year’s worth of expenses. No wonder tax time feels so stressful!
Instead, you need to turn business expense tracking into a daily affair. When it comes to accounting best practices, an easy way to do this is by charging all of your business expenses to one, dedicated business credit card. This will help you avoid needing to deep-dive into the ever-present pile of receipts on your desk come fiscal year-end.
Keep Accurate Track of Your Income
When you don’t have an accurate picture of your company’s income generated, your business will experience cash flow problems. Few things prove more deadly for small businesses, especially ones just starting. So, you need to keep accurate track of all cash infusions, revenues from sales, and loans. If you procrastinate on this record-keeping, you won’t have an accurate picture to look at come tax season.
What’s more, not keeping accurate revenue records could lead to underpayment of your taxes and serious IRS penalties down the road. Don’t let this very avoidable mistakes happen to you.
Use a Cloud-Based Accounting Tool to Automate Accounting Practices
What’s one of the best ways to separate your finances and keep better track of your accounting needs? A quality cloud-based accounting tool.
It will not only help you see a crystal-clear view of your earnings and expenses, but it’ll protect your sensitive information from nefarious online users. Because it automates your daily accounting activities, it will link to your bank accounts and credit cards organizing all of your transactions in real-time. You can set up automation to instantly categorize all expenses.
The best software should also store digital copies of all of your receipts, copies of checks, and invoices that you’ve paid. That way, everything you need for tax time remains right at your fingertips.
Not sure which tool’s right for you? Learn more about Xero vs QuickBooks Online, two comprehensive tools that can help you get started.
Four Accounting Tips to Streamline Tax Time
With the four tips above, you’ll gain mastery over your small business finances.
You’ll also put yourself in a better position come tax time. Central to keeping better track of your business finances remains finding the best cloud-based accounting software for your company’s unique needs.
This software will protect your company from identity theft as well as help you avoid trouble with the IRS and cash flow problems down the road.
Interested in more handy hacks to help your small business flourish? Browse our blog now for useful entrepreneurial and accounting tips.
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