Owning a small business can be very time consuming and stressful. Keeping your financial records in order is vital to the success of your business. Here are a few small business bookkeeping tips to save you from getting overwhelmed by the day to day tasks that can help you to succeed.
Keep it simple
When setting up your basic chart of accounts, keep it simple. The backbone of any business is the chart of accounts. It will help you to keep track of every transaction that your business makes. Only set up accounts that you need right now, you can always add more categories later. Use general account names instead of setting up one for each vendor or account, make one account for the type of transaction that it will be.
Have a plan
The best way to have a successful business is to have a successful plan. You need a financial forecast or a budget and it is important to monitor how you are doing in comparison to your plan. This should be done at least monthly. By comparing your income, expenses and overhead costs against those you have in your budget, you can make the necessary adjustments immediately to avoid getting a shock at the end of the year.
No matter what line of business you are in, it will generate paperwork. Invoices, receipts, tax deposits, payroll, time cards, mileage logs, bank deposits, and statements—just to mention a few. These days, paperwork can be replaced by digital files but it is just as important to keep your digital records organized as it is to keep the paper ones. If you put every piece of paper in a file folder carefully marked with what it is for, you will be able to easily access it when it comes time to pay bills, bill a customer, pay taxes, etc.
Don’t put off your billing or bill paying. Delays can affect your cash flow and your bottom line. Some vendors offer discounts for payment made immediately. Know which ones those are and take advantage of the savings. Balance your checkbook as soon as you get the statement; this way you can address any discrepancies immediately. Checking your bank balance online will keep you in touch with your day-to-day expenses and income.
Dealing with taxes
Taxes are the single most burdensome part of owning a small business. If you have employees, then you will be dealing with payroll taxes, state and federal, SSI and Medicare deposits, unemployment tax and, of course, federal and state business taxes and sales tax. It can be enough to make your head spin. But this is where the fact that you need to be organized really comes into play as well as being punctual. Uncle Sam has penalties for those businesses who are not on time with tax deposits.
Keep expense records
Many of your business expenses are deductions that you can take from your income tax, either business or personal. Know what these deductions are and keep detailed records and receipts to back up all the expenses you have.
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Don’t be afraid to ask for help. Not everyone is up to the task of taking on the bookkeeping for their small business. Before you get overwhelmed, give the experienced staff at Chandler and Knowles CPAs a call to discuss the small business services we have to offer. Our team can help you to make sure you are making all the best decisions when it comes to the financial health of yo