![]() ![]() If you fail to put aside an adequate amount for your year-end taxes, you could be in for a nightmare when tax season rolls around in the spring. The IRS also has a vested interest in making sure you’re meeting your tax obligations. Remember, it’s much easier to do it right the first time than to try to correct it with the IRS later! 7. The IRS imposes heavy penalties for misclassification, even if it was done by mistake. If you have both employees and contractors on your payroll, it’s important to make sure that they have been correctly classified. ![]() Maintain Accurate Employee Classifications RELATED: Resolving Tax Debt for Small Businesses 6. Electronic payments help create an audit trail for you to reference should you ever need to substantiate any tax write-offs. However, by using credit or debit cards, you can track exactly how much you spend, as well as when, where, and for what reason. If you’re hoping to write off significant expenses during tax season, cash makes it even harder to do so since there’s often little to no record of these purchases. Avoid CashĪccounting software can automatically track a lot of things for you, but not cash. By keeping your files digital, not only do you save a few trees, you also reduce the risk of physical copies being ruined by flood or fire. These platforms have built-in templates that allow you to easily input and track basic items, such as invoices, deposits, and check printing. Most platforms provide everything you need to manage your company’s accounting – including digital organization of bookkeeping documents. Modern accounting software has revolutionized small business bookkeeping. Instead of carrying around that receipt until the ink wears off, snap a photo with your phone and upload it to the app! 4. Speaking of offsite storage, using a cloud-based accounting software not only gives you offsite data storage, it also allows you to access your bookkeeping data anytime, anywhere, from any device with an internet connection.Īccounting apps save you time and money by automating financial management, organization, and reports. To keep essential data safe, follow the 3-2-1 Rule: three copies of the data, located on two different types of storage, with at least one copy offsite. If you lose your records, you might not be able to take advantage of some important tax deductions. Making sure that your financial records are backed up in the event of a natural disaster or cyberattack are key to keeping your business running smoothly. If you can’t afford to lose it, make a plan for keeping it safe!įor many businesses, data is their most valuable asset. This tip should be applied to all your business data. Engage in Disaster and Data Recovery Planning ![]() ![]() More than just a bookkeeping tip, maintaining separation between personal and business finances is practically a rule for small businesses to succeed. Mixing business and personal finances also makes it much more difficult to assess how your company is doing financially, because cash flow is obscured by non-business expenses. Comingling accounts and expenses – even by accident, like using the wrong credit card – makes more work for you or your accountant to organize and can send up red flags to auditors. It is essential to keep your personal finances separate from your business. ![]()
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