FIVE BOOKKEEPING TIPS AT TAX TIME
Because tax extension deadline is around the corner, here are a few of our best ideas for getting and staying ahead of the tax issues facing most small businesses:
- Find a Good Advisor
Having a good advisor can become invaluable. They can prepare/review year-end financial reports, clarify answers to questions (depreciation, Section 179 rules, meals and entertainment for example) and correct any mistakes. If your budget is small consider outsourcing this function. If you are using QuickBooks, look for a certified Pro-Advisor who can assist with both accounting and the most effective use of your software.
- Keep Personal and Business Finances Separate
Mixing the two makes your accounting more difficult to handle and will save time and money at tax time. Make it your practice to use a business credit card and business checking account for business purchases only.
- Reconcile Your Bank and Credit Card Accounts
Reconciling your records to bank records is the fail safe way to ensure all transactions have been recorded.
- Consider Cloud-Based Accounting
Understanding how to automate your accounting with bank and credit card feeds will streamline the process and potentially improve accuracy (provided you understand how the system works). Hiring an outside firm to implement this can actually save money. Someone who understands the intricacies of your balance sheet and income statement will provide a sound foundation for accurate financial reporting.
- Set Aside Money for Taxes
Tracking your income and expenses properly in real time allows you to be prepared for year-end taxes. Setting aside a bit of money each month towards paying your small business taxes means no panic at tax time. Having your advisor review your books regularly will help with year-end planning.