Bookkeeping is a major part of any business. It’s needed to keep your finances in order. Payroll, large purchases, and business expenses must get paid. It can be daunting at first, but good bookkeeping is a necessity for a healthy business. Many programs out there, such as QuickBooks, can help. You can also opt for the good old-fashioned ledger and pen. No matter which bookkeeping method you prefer, there are always some things to keep in mind. Here are 5 bookkeeping tips to help your business.
Keep up With Your Bank Accounts on a Regular Basis
Any time money is received or paid, it needs to be immediately logged into your bookkeeping system. By doing this as soon as possible, you know you won’t have any missing information when it’s time to reconcile your bookkeeping records with your bank accounts. This keeps you in the know on how much your business has at any given time so that you can plan accordingly for future expenses such as taxes or expanding your business.
Reconcile your books with your bank statements as soon as they come in. Don’t wait until numbers don’t add up or you think something didn’t get properly recorded. By taking care of this task as soon as you can, discrepancies can be spotted quickly and taken care of before it hurts your bottom line.
Personal Finances and Business Finances Should Be Separated
It is critical to keep your personal and business finances separate. If there is any crossover, you could face serious repercussions. In certain professional industries, mixing personal and business finances can result in ethics complaints and criminal charges. By keeping them separate you relieve yourself of this worry. Don’t work on both accounts at the same time. Choose different times and days to reconcile your account. Make sure that you follow all of the rules in your industry before you move any money from your business account to your personal account. Have your personal and business statements sent to separate addresses. Keeping these finances separate can protect your business.
Don’t Forget Your Taxes!
Many sole proprietorships must pay their taxes on a quarterly basis . It’s crucial you stay on top of both federal and state taxes. If you end up owing back taxes, the state and federal government has options (depending on whether you filed taxes at all, hid assets, or did something that you shouldn’t have done!). You could lose your business, have your bank accounts garnished, and even your personal assets (such as your home) could be levied. Always budget taxes into your expenses as soon as you open your business to make sure taxes are not forgotten or overlooked. You can set up reminders on almost any smartphone or email program to keep you informed of these tax due dates well in advance. The IRS website has many helpful articles that can help keep you informed of tax requirements.
Keeping your accounting books detailed will help with taxes as well. How much you’ll pay in taxes depends on the income it brings in and how your business is structured. If your records show deposits but not what they are for you could be paying taxes on money that is not income such as business loans. Talk with a CPA or tax attorney to learn more about how you can best minimize your tax bill.
Accounts Receivable Needs Your Undivided Attention on a Daily Basis
When an invoice goes out, that’s it, right? No, it’s not. Accounts receivable needs daily monitoring to make sure you are getting paid. If an invoice goes unpaid, follow up is needed as well as possible consequences such as interest or late charges. Make sure, when starting your business, you have a plan in place for unpaid invoices. Whether you choose to send out reminders, add on late fees, or send the account to collections, create a consistent plan and stick to it.
Getting Outside Help Is Never a Bad Idea
Sometimes things get hectic and your bookkeeping suffers. Don’t let that happen! If you find you can’t keep up with your books as well as needed or if you just don’t even want to bother with it in the first place, there is nothing wrong with getting outside help. Having a professional keep an eye on your books for you takes your mind off it and relieves you of that stress. Clients ARM can do that for you. We have a staff of professional bookkeepers to take care of your books, so you can take care of your business. Contact us today for your free consultation.