Are you trying to become a better bookkeeper and also be a good tax accountant for your business that is still growing? This might not be the easiest thing to do, however, below listed are some bookkeeping tips that should help you be on top of your game.
(You could still decide to hire a tax accountant near me or tax services near me, but knowing this is for your own good)
Create an easy-to-follow record-keeping system
Every transaction your business makes should be recorded and organized in a way that is easy to maintain and keep your cash flow under control. Keeping track of all business documents, including invoices, receipts, and expenses, will help you anticipate future opportunities for your business and maintain tax compliance in the event of an audit.
While there are easy ways to digitize paper receipts, if you prefer to keep paper records, they should stay in a locked cabinet somewhere and be organized into a simple system. It’s also best to have a backup of your records in case something gets lost. Alternatively, most cloud accounting software can archive these documents by scanning receipts with your phone or sending electronic invoices directly to your online accounting system for reconciliation and record archiving.
Create an audit trail
No matter how careful you are with your books, you can still end up with a tax audit. You need to leave a trail of documentation that supports everything you’ve purchased and everything your customers have paid for. An audit trail is essentially a selection of documents proving that the transactions recorded in your books of accounts are in fact true. Your audit trail helps you go back if you run into problems with things like tax inaccuracies, source documents, or missing transactions.
(This doesn’t only benefit you as a small business owner but all accountants near me or tax services near me that you’d soon start searching for, once your business grows)
Know your business expenses
It is difficult to predict what expenses you will face when you start a business and what expenses are tax deductible. For example, costs related to running a business and related to generating your income are tax deductible. However, if you buy something that’s just for you, you can’t add it to your accounts. Choose accountants near me and outsource bookkeeping to stay hassle-free if this becomes too overwhelming.
Combining business and personal accounts doesn’t mean you can just claim everything you buy. You need to read and understand what is claimable under Australian tax laws. If you’re not sure what counts as a deductible purchase, check with your accountant or local tax office.
Automate with cloud accounting software
We are fortunate to live in an age where cloud accounting software gives you as a business owner the ability to access information about your business whenever you need it. Technology has made it possible to sort through piles of paper, check spreadsheets and perform manual calculations each month. Today, cloud software does most of the hard work for you.
Accounting software can automatically send invoices to customers with the correct due date, track incoming and outgoing expenses, and generate cash flow reports. There are many software options. The right choice for you will be the one that makes your life easier, and if you are not sure which option is right, you can always consult a professional accountant. Take help from accountants near me.
Track cash payments
It’s easy to forget when you start building your business, but you also need to keep track of your cash payments. Any money received by the Company must be paid into the Company’s bank account before spending, including for Company Products. It’s tempting to immediately take cash to buy inventory, but this can easily destroy your accounting system.
When recording cash payments, be sure to note which customer paid so you don’t have to chase them later. If you’re not sure how to handle cash payment details in your accounting software, talk to an accountant who can help you set it up and use it correctly.
Create regular reports
A good accounting strategy is not only necessary for tax purposes. Keeping track of your income and expenses makes regular financial checks easier. With the right accounting software, you can ensure that all your clients pay their invoices on time and avoid any gaps in your reports.
While it’s helpful to conduct monthly reviews, you may want to take a close look at your financial and accounting records at the end of each quarter, paying close attention to trends such as declining or rising sales, high expenses, or evidence of late-paying customers. Getting your numbers right will help you plan for better cash flow in the future.
Take help from accountants near me.
Make your books a priority
Finally, tracking your expenses may not be the most exciting part of your business, but it needs to be a priority. A mistake on your tax return or a series of mishandled accounts in your accounting records can turn your life upside down. From day one, make sure you have a strategy in place to keep your books organized and up-to-date. If you cannot, hire a competent accountant by searching for accountants near me in Toronto.
While you don’t necessarily need to balance everything at the end of each business day, you should sort through your financial information at least once a month.
Keep a tax payment budget and record it accordingly
There are few things more beautiful than seeing your business make money. Maybe you know you’re starting to make money and decide to put all your extra money back into the business as soon as possible. Spending profits on product development, marketing, and other growth strategies is a great way to keep your company moving, but don’t rush it. You can also hire a tax accountant near me or tax services near me.
Remember that some of your income will have to go towards tax expenses at the end of the year. You should save at least a portion of all your income, maybe 20%, to make sure you have enough money to pay the bills. If you’re trying to keep that money in your business account, use a separate savings account.
Bottom line…
Strive and commit to better accounting
Whether you do most of the bookkeeping yourself or hire a professional to handle things for you, having the right bookkeeping strategy is essential. Follow the tips above and you’ll have a better understanding of your business’s cash flow, fewer tax problems, and more opportunities for growth.
You can also outsource bookkeeping to an accountant near me or a tax accountant near me.