It’s January, and you know what that means. 2020 is now in the past and it’s time to start gathering your documents and preparing for a smoother tax season.
I know, the word TAX should be a 4-letter word, but it is a necessary evil. Whether you’re an individual, a sole proprietor or small business owner, you need to file your taxes Every. Single. Year. So, if you want a smoother, less stressful tax season, you need to get your books in order.
Proper bookkeeping is the key to your success. Having all your “books in a row” will not only make for a smoother tax season, but it will also save you money, and help your business grow.
Good Bookkeeping Provides a Stress-free Tax Season
Keeping your books up to date is the first step to streamlining the tax process and alleviates some unnecessary stress. You don’t want to be throwing all your stuff together the day before the deadline.
Track everything and keep your receipts. Make sure to use your business account for your business expenses. Using your personal account for business transactions is like waving your hands in the air and begging the IRS to come audit you. Good bookkeeping practices will keep you compliant with state and federal rules and in the event you are audited, your clean books will be the proof you need to claim those expenses.
Here’s our top 3 tips for your bookkeeping cleanup.
- Make sure that all accounts are reconciled through 12/31 and there are no unreconciled transactions from last year. To ensure you’ve done that correctly, watch this resource.
- Check for any expenses paid from personal accounts or cards that should be counted as business expenses and added to the books.
- Open a balance sheet and look at the balances – there shouldn’t be any negative loan balances or assets. Do the loan and bank balances look correct? Is anything missing? Were any covid loans forgiven that are still on the books, etc.? Do Accounts Receivable, Accounts Payable, and Undeposited Funds look accurate? Often, large balances in these accounts can mean that transactions have been duplicated.
Proper Bookkeeping Saves You Money
You can’t be a successful business owner without accurate records.
Your financials are the language of your business. Monthly bookkeeping with financial analysis and visual data will help you evaluate the performance of your business.
With accurate records you’re able to monitor your budget, maximize your income, and determine where you can cut costs.
Accounting software may seem like a simple way for a small business to save money, but it’s important that your bookkeeping is handled properly.
Hiring a firm to do your bookkeeping, tax filing, quarterly payroll and annual reports will assure all of your income and expense information is organized, up to date, and understandable. It may seem expensive but the value of having accurate books exceeds the cost of a reliable accountant.
A professional bookkeeper with tax knowledge understands how important tax deductions are to the small business owner. They can help you maximize those deductions with monthly reports and proper planning.
A Great Bookkeeper Will Help Your Business Grow
As a business owner, you should be focusing on growing your revenue and developing new strategies. According to business advisor, Joe DiSanto “It is the bookkeeper’s job to take the burden of finances off the business owner so they can focus on building customer relations and sales.”
At Incite Tax we partner with you to provide your bookkeeping solutions. We manage your books and provide a custom analysis so not only will you have a smoother tax season, but you can grow your business as well.
Stop trying to “catch up” on your books each year.
We’ll give you monthly reports that are easy to understand so you can spend less time worrying about the day-to-day accounting, and more time to do what you’re great at.
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