Bookkeeping Tips to Prepare You This Tax Season

tax season

Accounting is an essential and most complicated part of every business. Bookkeeping must be accurate to get a solid grip on the business’s financial situation. The basic concept of bookkeeping is recording your day-to-day transactions efficiently that includes expenses, income, etc., as errors in bookkeeping can be the reason for penalties during tax season.

Check out the following top bookkeeping tips for small businesses:

Keep Your Records Organized – It is most important to organize your financial records accurately as IRS will check all the documents of expenses, income and financial transactions that you made during the year. However, you don’t have to worry much!

You can easily make use of tax and accounting software to streamline everything but choosing the right software completely depends upon your business requirement. Some of the most popular choices among businesses are QuickBooks, Xero, NetSuite, etc.

Keep Your Personal Finances Separate – To avoid unnecessary confusion in your books, you should make sure you keep your personal finances separate from your business accounts. Have a different bank account and credit card for your business and personal use. It will help to speed up your bookkeeping process.

Also, it will save you’re a lot of time because you don’t need to filter out your personal purchases.

Use Cloud Accounting Software – For quick and smart business work use cloud accounting software. It will provide you with accurate financial details of your business and brings a real-time reporting to small business owners. The use of cloud accounting software will make comfortable your tedious bookkeeping process.

Create Functional Chart of Accounts – Create a simple chart of accounts that will categorize every single financial transaction that you made. The chart of accounts is the backbone of a bookkeeping system.  As your business grows, you need to modify your accounts chart also.

Go Digital with Your Payroll – To manage hourly employees, many businesses are still using paper. By using the software like QuickBooks, you can avoid paperwork. It saves your valuable time, simplifies bookkeeping and your payroll process efficiently.

Regularly Reconcile Your Bank Statement – Whether you are managing bookkeeping manually or using the software, you must reconcile your bank statements each month. It will help you to confirm that your financial records are accurate and there’s no fraud in your company.

Use Online Banking for Your Business – Doesn’t matter whatever is the size of your business; you should open a separate business bank account and use online banking. With the use of online banking, you can easily monitor your business’s cash flow. You can access your business’s financial information and generate reports in real time. Online banking helps you to manage your bills and expenses efficiently.

Avoid Paying Business Expenses in Cash – Never use cash to pay your employee’s or suppliers. Keeping track of your cash payments is tough. Additionally, without records, you cannot measure the business productivity. So, always use credit or debit or check payments for any payment as it will help you to trace each transaction efficiently.

Hire an Outsourcing Firm – Hiring a bookkeeping outsourcing services firm takes away the stress of supervising the in-house accountants. The firm will also provide you the access to the best accounting tools. Putting your books into the expert's hands who know the best practices, will make the whole process easier and effective.

With the help of above bookkeeping tips, you can stay away from the burden of bookkeeping. Moreover you will be able to save your time and avoid unnecessary stress. Staying on top of bookkeeping will help you with greater business insights, timely reporting and help you to make correct business decisions.

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