Five Bookkeeping Tips for Business Entrepreneurs.
1. Plan for major expenses! Why? You’re less likely to miss business opportunities or have to scramble for a loan when the expenses become unavoidable.
Put events like a major computer upgrade on the calendar a year in advance or, ideally, three to five years ahead. Acknowledge the seasonal ups and downs, something many entrepreneurs are reluctant to do.
2. Track expenses. You don’t want to miss tax write-offs!
A good idea is to have a credit card that you use solely for business. It’s a pretty basic accounting system. Most card statements categorize expenses, so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you’re less likely to pay cash at and lose the receipts, forfeiting tax-time write-offs. Things like pens and printer paper can add up.
3. Record deposits correctly. Doing this makes it less likely to pay taxes on money that isn’t income.
Adopt a system for keeping your financial activities straight, whether it’s a notebook you use consistently, an Excel spreadsheet or software such as Quickbooks. Business owners typically make a variety of deposits into their bank account through the year, including loans, revenue from sales and cash infusions from their personal savings. The trouble is that at the end of the year, you or your bookkeeper might erroneously record some deposits as income, and consequently pay taxes on more money than you’ve actually made. Nobody wants to pay more taxes than they have to!
4. Set aside money for paying taxes. The IRS can levy penalties and interest for not filing quarterly tax returns on time.
Systematically put a portion of money aside throughout the year for taxes. Then note tax deadlines on your calendar, along with prep time if you need it, to make sure you actually make payments when they’re due.
5. Keep a close eye on your invoices. Late and unpaid bills hurt your cash flow.
Assign someone in your company to track your billing. Then put a process in place for issuing a second invoice, making a phone call and perhaps levying penalties such as extra fees at certain deadlines.
If you are nervous about doing your own bookkeeping, you can hire the professionals at Tax Alternatives in Nashville to do it for you! We service Nashville, Brentwood, Franklin, and surrounding areas! Give us a call today to see how we can help you and your business at 615-742-1099.
For a free 30-minute sit down session with our experts, visit us HERE.
