We know, you didn’t go into business to spend all your time doing the books. But what if just a few tasks of daily, weekly or monthly maintenance could save you many hours of work and thousands of dollars? It would be worth it, right?
Now they need to go shopping for software again. Here’s how to not make the same mistakes this time.
1. Enter receipts as soon as you get them.
Or at least once a month. One of the most common problems we see is the lost receipts that could have been used to reduce your income tax; or to prove your case if you get audited by the IRS. They’re also essential to getting an accurate report of your profits and losses. Your filing system or business accounting software should already be set up to do this task in a couple of seconds.
2. Reconcile your bank accounts.
This should be done every month, when you get your bank statement. Does the bank balance on the statement match what’s in your records? If not, why not?
3. Keep business and personal accounts separate.
After reading the previous two habits, you have an idea why this is essential. Many small business owners pay for business expenses with a personal credit card, and forget to reimburse themselves. Or they pay a personal debt with company funds. Then they forget which is which when they’re doing their taxes or generating financial statements for a loan application.
4. Categorize expenses correctly.
Knowing what type of expense goes in which category does require some bookkeeping knowledge. It’s important, though, because there are different tax treatments for the categories; mistakes here can cost you big bucks.
5. Get serious about petty cash.
Have a strict procedure for who is taking out cash, what it’s being used for, and requiring receipts to account for money spent. Whether the cash is coming out of your pocket or the office safe, the rules are the same.
6. Report sales tax on time.
It’s all too easy to fall behind with this chore. But think how much money you’ll save when you’re not paying all those late fines and penalties. You also need a system that accurately tracks sales amounts, so you don’t accidentally overstate your sales and remit too much sales tax. This should be done automatically, so you don’t have to spend time on it.
If this still seems like too much work on the part of your business you hate most, Xendoo can take much of that load off your shoulders. From bank reconciliations to automatic data entry of transactions to real-time tax coding, we do it all for a flat monthly fee that works with your budget. Your peace of mind is well worth it, too!