Do you want control over your schedule? Are you tired of not having a good enough work/life balance? Do you want to choose who you work with?
It sounds like you’re destined to run your own business. There are a lot of perks to it once you get past the unglamorous aspects.
Keeping track of all your company finances can be a huge headache. If you’re not careful, you could end up getting audited or fined by the IRS.
We’ve got a few bookkeeping tips that will help you avoid that unfortunate scenario. Check out this guide to get started!
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- Keep Your Business and Private Cash In Separate Accounts
Out of all the business tips that we give you today, this is the one that’s the most important. Take strides to keep your company and private expenses separate.
If you don’t, things will get super confusing around tax time when you have to report all your expenses. If you hire bookkeepers, they’ll have to spend hours picking through your bank account to separate everything.
Your bookkeepers are professionals, but they’re human. If you make things confusing for them, it’s possible that they’ll make mistakes that could cost your company.
To avoid the hassle, we recommend picking up a business credit card and using it for company transactions only. It will keep your finances organized and help you build business credit.
- Pay Yourself
If you’re part of a big corporation, you’ll enter yourself into the payroll system like any other employee and run your numbers. While freelancers and self-employed business owners don’t have to do the same, it’s a good idea too.
If you pay yourself a salary like you would an employee, it will stop you from using your business earnings to pay for personal expenses. It reinforces the “keeping your money separate” mindset that we talked about above.
- Reimburse Yourself
As much as you try to avoid using the money in your personal bank account to pay for your trip, things happen. You may end up having to charge a dinner or two to your own credit card.
Keep track of all your receipts, and when you get back home, write yourself a check for the money you spent.
- Don’t Waste Paper
The future is now. If you use cloud-based accounting software, you’ll be able to sync it up to your business bank account. When you pull money out of it or put money into it, the program will update itself to reflect the changes.
You won’t have to worry about losing any of your business finance data because the cloud will back itself up on a normal basis. That beats stuffing your filing cabinets full of paperwork that you’ve got to keep up with.
It’s also more accurate than plugging everything in an Excel spreadsheet and trying to do the math on your own. Even if you’re good at math, human error is something that happens.
- Hire the Pros
You can set up your own accounting software, but it’s a little complicated. That’s why you should hire the pros at Klean Books. After they assist you with getting the program going, they’ll show you how to use it.
They can take care of paying your employees, filing your tax returns, and calculating your worker’s tax withholdings. If errors pop up with your finances and taxes, they’ll find out what it is and help you fix it.
Their hard work will free you up to do what you do best. Running your company.
- Keep All Your Receipts
Your accounting software will automate all your tax records and finances for you, so you don’t have to lift a finger. That doesn’t mean you should throw your receipts away.
You’ll need them when you’re doing your tax deductions. You also don’t want to get caught up in an IRS audit without receipts.
- Plan Ahead
Your business is running smoothly. All your finances are in order. Your books look great.
That is until your AC unit decides to break.
You never know when an unexpected expense is going to happen. If you’ve got some money set aside for a rainy day, you won’t have to stress it.
If you don’t have emergency cash, you may end up having to use your personal finances to handle the problem.
- Quarterly Reviews Are Important
At the end of every quarter, it’s time to take a good hard look at your bookkeeping software. You need to check for common patterns like sales increases and decreases.
Once you’re done glancing over your finances, get a second opinion. Meet with your financial advisor to discuss the patterns you noticed. They’ll be able to tell you how to proceed.
- Analyze Your Reports
Again, your bookkeepers are professionals, but they aren’t infallible. A good portion of their job is plugging numbers into a program. They can make mistakes.
That’s why you should always check behind them by analyzing your own reports.
The first report that we’re going to talk about is your aged accounts payable. It will show you how much money you owe your vendors. It will also let you know when your payments are due.
Looking at your accounts payable will help you prepare for any large hits to your cash flow before they happen.
Your accounts receivable will tell you how much money your customers owe you. If someone’s payments are late, it will be reflected in this report.
- Avoid Cash When You Can
If you have a choice to pay with a card or cash, choose the card every time. It’s too easy to lose track of your finances when you have a wallet full of money because there’s no record of what you spent.
When you use a debit or credit card, there’s always some kind of paper trail that you can follow.
- Use Time Tracking Software
Your employees enjoy getting paid. All it takes is a single slip-up with payroll for you to have some angry workers on your hands.
Some business owners try to keep up with their employee’s hours by hand or timesheets. These are inexpensive methods, but they allow for a lot of error.
That’s where time tracking software comes in. It allows your employees to clock in and out of work using an app.
It’s convenient for your workers because they don’t have to worry about reporting their hours to you. It’s convenient for you because most apps keep tabs on an employee’s PTO and sick leave.
When choosing time tracking software, integration is key. Try to find an app that works with your bookkeeping software.
- Don’t Miss Tax Deadlines
During your first year as a business owner, it’s easy for tax deadlines to catch up on you. If you’re short on funds, you could end up paying thousands of dollars in penalties and fees.
The good news is that the IRS makes keeping up with due dates easy. You can sync up the IRS tax calendar with your own business calendar. Once you set it up, you’ll get reminders when you have an incoming payment.
On top of keeping track of your tax deadlines, you should be setting aside a bit of money at the end of every month to put toward what you’ll owe the IRS at the end of the year. It’s much easier to manage than paying it all at once.
- Perform Regular Checkups
Your business finances are sort of like your chores at home. When you go too long without managing them, everything will turn into a disorganized mess.
You’ll lose track of your overdue invoices, which will cause your checks to bounce when you’re trying to pay for business expenses.
To prevent your numbers from going into complete disarray, it’s good to do frequent check-ins. Don’t worry, you don’t have to do a full analysis every week. A quick glance will do.
Bookkeeping Tips Every Business Owner Should Keep In Mind
One of the worst things about running your own company is taking care of your finances. As unglamorous as all the paperwork is, it’s a necessary evil.
If you don’t use these bookkeeping tips to stay on track with your money, it could throw your entire business into chaos. You may end up owing the IRS tons of money in penalties and fees. Don’t let that happen to you!
Are you looking for more tips that will help you keep your business afloat? Visit our blog every day for all the latest industry news and pointers.