Many small businesses use Quickbooks for their bookkeeping software. It is a fabulous way to maintain financial records in a convenient way, especially around tax time. If done correctly, your Quickbooks file should make tax time a breeze. However, if you have made small mistakes in recording throughout the year, you may be paying more taxes than you owe. Overpaying is never a good thing for a small business, so to avoid this situation you should have a qualified consultant review your files to look for mistakes you may have made during the year.
One way an error can happen when a business owner contributes their own money to their business. It happens now and then that you may have to use your money for a business expense. If this money is simply recorded as income, it will be taxed. This type of income must be specified as an owner contribution to the business within your Quickbooks file in order to avoid being taxed. Don't make this mistake and find yourself paying tax on your own money.
Sometimes it is necessary for a business owner to loan personal money to their business. This is money that will be paid back to owner, not money that is being given to the business. Once again, if this money is simply classified as money coming in, it will show as income and will be taxed. Sales tax only needs to be paid on sales to customers. This type of credit must be recorded as a loan so that it is not mistaken for income, and taxed.
Many business owners use credit cards to make purchases for their business. Quickbooks is able to sort these charges and recognizes them as expenses for your business if they are recorded correctly. Suppose you purchase new office furniture from a superstore and simply record the total amount spent. Quickbooks needs to know what type of expense this was so that it could be correctly classified. This would be an office expense, and would be a tax deduction for your business. Take the time to specifically record credit card charges rather than just a one-time charge to your credit card company in order to receive accurate deductions.
Quickbooks is a great tool to when it comes time to pay your taxes to the state comptroller. Unfortunately, this is another time errors can occur. If sales tax paid by customers is not recorded correctly, you risk overpaying sales taxes to the state. Also the amount you pay to the state comptroller needs to be recorded correctly through the 'Pay Sales Tax Liability' window. Otherwise, Quickbooks will not give an accurate recording of what you owe.
One other mistake that business owners often make in their Quickbooks bookkeeping is incorrectly recording ATM withdraws or debit card purchases. Consider each of these like writing a check. You must record the details of the transaction each time, as it happens. Don't get caught swiping your card and walking away and then later trying to recall the transaction.
If you are a Quickbooks user, you know the helpfulness of this program. That said, it is always a smart move to have an experienced Quickbooks consultant in your area look over your files to be sure that you haven't missed a thing.
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