Why is Bookkeeping Important

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Why Bookkeeping is Important

Bookkeeping can be tedious for any business, but if your small business doesn’t keep tight books, it can make your taxes a nightmare. However, with a clear-cut process and some simple bookkeeping tips, you can get a better grip on your financial situation and even increase your earnings. The goal is to get a simplified process created detailing your business’s finances. A method that combines your expenses, invoices, deposit records, and tax information can make a small business owner’s life ten times easier, especially as tax season rolls around.

Having backup documentation of purchases for your business will help you when it comes to claiming deductions on your tax returns. Record all your deposits so that you know exactly what is going into your business account; that way, you are less likely to pay taxes on cash that is not income.

10 BOOKKEEPING TIPS THAT CAN BE USED YEAR-ROUND 1. GO PAPERLESS WITH CLOUD ACCOUNTING. Most accounting software provides all the basic features you need to do any type of accounting. Intuit’s QuickBooks is one of the most popular on the market right now.

Find a package designed for small business owners because it simplifies the process by providing basic templates such as printing invoices, receipts, and business invoice checks. Access your business information from anywhere by adding a cloud-based accounting system.

2. FIND A GOOD CONSULTANT. Having a good payroll consultant who can help you at least once a month can be critical. They can teach you

how to manage books properly, answer questions, and correct mistakes. Don’t worry if you are on a tight budget, as accountants have many options.

3. SEPARATE PERSONAL AND BUSINESS FINANCES. Do not confuse the two. This complicates the accounting process. If you are dealing with only one type of account, keep it organized because it is much easier to keep accurate records. In addition, maintaining these accounts separately can save you a lot of time.

4. CREATE A BASIC EXPENSE PLAN. Set aside money for significant expenses like inventory, office supplies, and repairs and maintenance. By budgeting your small business for the next few years, you do not have to worry about overseeing these expenses in the future.

ACCOUNTINGANDREFUNDS .COM | (678) 218- 6 4 3 3 | S TONE MOUNTAIN , GA

5. SAVE MONEY FOR TAXES.

8. RECORD TRANSACTIONS.

Properly keeping your financial records can help you be ready to pay your taxes at the end of the year. By saving a little money each month to pay your small business taxes, you do not have to cut expenses or take out a loan to pay your taxes at the end of the year.

Every transaction you make needs to be recorded. You can use bookkeeping software to record it or record it in a ledger book. Recording in a ledger book might be easier if your company is small or just a hobby business.

6. RUN END-OF-MONTH FINANCIAL STATEMENTS. Once you have entered your transactions and reconciled your bank statements, it is time to see how your business is doing. The most important things to look at are your • Balance sheet: This shows your equity, business assets, and liabilities • Cash flow: Shows your outgoing and incoming cash • Income: Shows your net income 7. KEEP DAILY RECORDS AND RECONCILE BANK ACCOUNTS MONTHLY. Double-check your bank account and daily reports at least once a month. Reconcile withdrawals and deposits from your account to help identify discrepancies.

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9. SET THE BOOK TO BE REVIEWED AT A SPECIFIC TIME EACH WEEK. Set aside at least 30 minutes each week to check your finances and ensure everything is in order. This will give you an extensive overview of your business each week, and everything will be in order when you pay your taxes.

10. CHECK MONTHLY ACCOUNTS RECEIVABLE. If your customers owe you money for your services, especially at the end of the year, this is different from having that money in your business account. Make sure you’re not paying any receivables to get all your monthly payments. If you do not have trade receivables, your income will be reduced.

FOLLOWING THESE STEPS WILL HELP GAUGE THE FINANCIAL HEALTH OF YOUR BUSINESS AND HELP YOUR ACCOUNTANT AT THE END OF THE YEAR WITH YOUR TAXES. THE LESS TIME THEY MUST SPEND DOING YOUR TAXES, THE MORE MONEY YOU SAVE! YOU CANNOT LOSE WITH BOOKKEEPING. IT IS ESSENTIAL FOR A SMALL BUSINESS OWNER. WE HOPE THESE FEW STEPS MADE IT EASIER TO GET STARTED.

ACCOUNTINGANDREFUNDS .COM | (678) 218- 6 4 3 3 | S TONE MOUNTAIN , GA