5 Tips to Reduce Bookkeeping Stress for Next Year
Assets = Liabilities + Owner’s Equity: the infamous equation of bookkeeping, the Achilles heel of your business. If you’re a small business owner, it’s probably safe to say you don’t enjoy doing the books. Let’s face it; you are good at everything (sales, marketing, management, etc) except for the nitty gritty and least fun part of owning a business. You’re too busy creating income so bookkeeping gets placed on top of the list of dreaded chores. Luckily there are softwares like Quickbooks, Sage, Quicken, Xero that are extremely helpful in saving time, but the question remains how do you prepare yourself to ensure a (somewhat) seamless process for next year? Even though tax time is over, it doesn’t mean you can sit back and relax just yet. Here are some tips to keep you from ripping your hair out for next tax year.
- Keep track of your expenses and invoices while making sure you’re following the GAAP standards. Categorize, categorize, categorize. This will help your keep track of how much money is going out, where it’s going to and what money is coming in.
- Remember to classify employees. As an employer, you’re responsible for managing employee forms such as W-4s and I-9s, and keep in mind there are different rules and regulations for independent contractors, consultants and freelancers.
- Plan for major expenses. Set aside money for oncoming projects, expenses and expenditure, especially money to pay your taxes.
- Outsource your bookkeeping as soon as your books make sense to you. The biggest mistake most small business owners make is to do it themselves. As soon as your books are somewhat reconciled, it’s beneficial to outsource your bookkeeping to a professional with skills and a second set of eyes to manage and scan for errors.
- Cut time, not corners! Errors can cost your company significantly, so make sure you’re not misfiling by going over these errors ahead of time.
It’s interesting to know that many of the top reasons why businesses fail are related to bad financial decisions. Not having financial reports or accurate records will set the stage for mistakes that can cost you much more in bad decisions, unnecessary penalties, or non-collectable account receivables. Even worse, poor accounting methods can also prompt government audits and other time consuming activities.
Owning a business can be complex, but it can also be rewarding if you plan it right, so don’t wait until tax season to sort out your accounting. Keep records of everything with organization and have backup documentation.
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