Here are 5 basic accounting tips for small business owners:
Having general knowledge of basic accounting principles helps to emphasize the value of tracking your finances meticulously. Take advantage of free online resources and books that outline basic accounting principles.
Keeping good records is a must for substantiating deductions and expenses for tax purposes and as a basis for providing accurate reporting of the financial state of your business. Improper documentation causes your business to miss out on tax deductions or understate your income which can lead to penalties and fines.
Separate Personal and Business Expenses
You need to have a separate bank account and credit card for business expenses. This separation saves time and money by not having to waste resources sorting through transactions in accounts with combined expenses.
Plan for Major Expenses
Allocate enough funds in your budget to plan for major expenses. Some businesses owners tend to underestimate the amount of money needed in this category which leads to a shortfall in their overall operating budget.
Set Aside Money for Taxes
Systematically set aside money throughout the year for tax obligations. Notate tax deadlines to make payments on time and avoid tax penalties and interest payments to the IRS.
Bookkeeping and taxes can feel overwhelming on top of all your other business expenses. If you are feeling overwhelmed or confused, contact us today to simplify your workload.