Whether your starting a new business or have one already started bookkeeping is the most important thing in your business. This is the best way to keep track of your sales, expenses and record-keeping to ensure your business is making a profit. It is also good for you at tax time. The better your books are kept, the cheaper it is for you to get your taxes prepared. Here are some tips to get you started.
SEPARATE BUSINESS FROM YOUR PERSONAL
Start with a business bank account. Once you are in full-swing, it will be a nightmare to separate business from personal. This will give you a true and accurate account of your business income and expenses. Some might think it saves time co-mingling personal and business, but with a little investment in time, it would save you in the long run. Especially at tax time and if you were ever audited by IRS. If you are too busy running your business, you can always hire a bookkeeper to do the work for you. It might be worth while for you if you are just getting started to get on the right track.
PLANNING YOUR DAY
Business owners have a million things to do. They become a one-person band and are expected to know how to do everything from bookkeeping, advertising, sales, marketing, collections and more. The hardest thing is to know what to do first. With a little project management and good planning, you will be able to accomplish everything you need to. I recommend a planner or project management software (PMS). There are a few free PMS’s out there such as Asana works well keeping track of projects. You can use the tools you already have such as Microsoft Outlook or One Note. Make sure to schedule in time each day to work on your books. Its imperative, especially in small business to get invoicing and receiving payments timely.
TAX PLANNING
Every Small business has different tax needs. It is important for a small business owner to know what their tax obligations are.
It is also good to know what can be deducted because when you are keeping track of expenses you understand what you can claim and what you cannot. Keeping accurate records of your spending from the start, will increase your chances in being able to claim deductions when tax time rolls around. A basic understanding of your tax requirements is crucial when starting a small business, so you can ensure you’re following all the rules.
Publication 334 is for Small Business owners. This is a useful tool from IRS https://www.irs.gov/pub/irs-pdf/p334.pdf. This will help you understand what is allowed and help in your planning.
For payroll guidance, this is a good publication – https://www.irs.gov/pub/irs-pdf/p15.pdf.
One more is a Tax Calendar. This helps you understand deadline dates for various types of returns. https://www.irs.gov/pub/irs-pdf/p509.pdf.
BUDGETING
Most business owners are so excited to be starting a new business they forget how expensive it is not only to start it up, but to keep it running. It is very important that you create a budget from the start. You will want to project your income and expenses for the year. Then keep track of your actual income and expenses versus your budgeted amounts. To make sure you stay on track. It can be difficult when you start the business to project your income, but you need it in order to give your self some goals in order to keep your doors open longer than a few months. Underestimating the expenses can cost you your business. By being proactive, you will have an idea of when you need to push harder to get more sales.
INVESTING IN SOFTWARE
It is difficult to keep track of business expenses without using software. There are many different types of software available. I personally like cloud-based software as I can access my data from computer. It is a personal choice. Using a software like QuickBooks Online is useful as they have an app you can download on your cell phone. This enables you to access from phone or any computer. They offer packages to fit your needs.
I hope this post is helpful to you and look forward to writing new posts.
Take Care and May your Business Be Successful!!
Carolyn
