Six Steps to Keeping Your Small Business Tax and Finances in Order

May 23, 15 Six Steps to Keeping Your Small Business Tax and Finances in Order

Running your own small business can be quite the handful. It is probably a lot more overwhelming than you had thought it was going to be before you opened those front doors. There’s a lot to do just to keep customers happy and things flowing smoothly, but one part of business management that often gets overlooked is accounting. It’s easy to do. You have customers to look after, new products to look into, displays to arrange, sales pitches to practice in the mirror before you, well, pitch them—it’s easy to push that bookkeeping off. While that may seem like an adequate strategy, it can actually create a lot more hassle for you at tax time, when you have to scramble to get your accounts in order. Here are a few strategies that can help you keep your taxes and your finances in order with a lot less hassle.

Six steps that can make your small business taxes and finances a whole lot easier:

1) Business or personal?

It is very tempting when you run a small business to mix your personal expenses up with your business expenses. For instance, you are running to the office supply store to grab printer paper and you notice a few back to school items are on sale, so you grab them for your kids. This may not seem like a big deal, but it can make things a lot more complicated at tax time when you are trying to claim your receipts and calculate deductions. Avoid the headache; keep things separate instead. Cashiers don’t mind ringing things in separately, so make sure your personal purchases come from your personal account, and your business purchases come from your business account.

2) Keep things separate

Yes, you should definitely have separate bank accounts as well; if your business runs into a little trouble, it can be really easy to use your personal finances to try to solve the problem and that can actually do a lot more harm than good. Be diligent about keeping things separate, and make sure you keep track of all your receipts and statements. You should be monitoring your account steadily to keep track of your balance. A good filing system is really going to come in handy here.

3) Schedule time to work on your accounts

Do you close early one day a week, or do you open late? Setting aside just 15 minutes each week can go a long way in helping you to stay organized and on top of your accounts. Schedule this time (http://www.forbes.com/sites/theyec/2012/10/24/5-simple-tips-to-keep-your-small-business-finances-in-order/) in, and don’t let it get interrupted. You’ll have greater insight into your business as a result, and you’ll be able to make better-informed financial decisions. Plus, you’ll have it all organized already when it comes to tax time, saving you time and stress.

Six Steps to Keeping Your Small Business Tax and Finances in Order

4) Keep track of payments and expenses

Make sure you are keeping a record of all your expenses. Keep track of the cost of wages, benefits, overtime, and any other costs associated with labor—even if it’s just for you. Tracking these expenses now can ensure you are kept up-to-date on whether or not you are outspending your budget. Make sure this is part of your 15 minutes of accounting each week. Further, make sure you keep track of customer payments. Your business won’t go very far if you forget to get paid by your customers. Keeping track of this can help you gain a better understanding of how your finances are being allocated when you are waiting on customers to pay their bills—especially when there is a significant difference between the time expenses are incurred in the transaction and the date the payment is received.

5) Re-evaluate your methods

Just because your accounting for small business process is working now doesn’t mean it will continue to work for your business when things start to pick up. Always be prepared to make modifications based on what is best for your business. If you’re concerned about whether your financial management strategies are doing enough for your business, you can always seek CFO consulting services or business analytic solutions to help give you a new perspective on your financial plan.

6) Hire an accountant

Even if you think you are managing fine, you can consult with an accountant just to have an experienced professional examine your strategies. Having access to professional business accountants can be an important resource for any business. Plus, you can always outsource to your accountant when things get hectic—like at tax time. There are a lot of different tax regulations to consider, and letting an accountant take over can actually end up saving you time, money and stress—not to mention, having an expert overlook your accounts can help you keep the auditors at bay.