6 Bookkeeping Tips to Save Small Businesses Money
Trying to save time and money for your small business? Here are some bookkeeping tips that can help.
Many small businesses spend a lot of time balancing their books and trying to figure out what the best methods of preparations for Tax Day really are. While bookkeeping and ensuring that you are on track with your annual budget and ready to pay taxes when necessary, there are much easier ways that you can manage your books and keep them in order.
You can do this while also saving your small business time and money along with some extra stress that comes with spending days on end boiling over every cent that you are accounting for in your bookkeeping records.
The following are 6 great bookkeeping tips that will help save your small business stress, time, and money:
Keep your business & personal expenses completely separate
When your business and personal expenses are totally separate, it makes it much easier to manage your business’s finances and to know how your business is doing financially. It also gives the tax auditors fewer reasons to audit both your business and your personal income. Pay yourself first and foremost then keep the rest of the money separate and in the business.
Pay all expenses on time
Paying your business’s expenses on time, especially your credit cards can help keep your business’s credit score healthy! It also helps you avoid getting behind on payments and having to scramble to find cash to pay late fees if your bills are not paid on time!
File tax compliance forms on time
Filing all of your required tax forms on time will draw a lot less attention to your business an entity that needs to be audited on an annual basis. Turning in your tax forms on time helps you get in the habit of putting money aside for taxes and it helps you have a clue as to what your business will owe when Tax Day comes. You will need to put about 15% of your business’s money aside in order to cover your taxes for the year. Put the money in a separate account on a weekly or monthly basis and don’t touch it so you have the money come tax time.
Keep your papers organized
Keep all of your paperwork in a neat and orderly fashion and develop a method for filing this paperwork so that you are able to access it when you need to refer to information. Especially be mindful of where you put your monthly financial statements and financial reports as you will need to refer to these come tax time each year.
Go through & audit-proof your records
Be sure to file your receipts (every last one of them) and ensure that you are keeping track of business-related expenses that you have deducted from your taxes. The CRA will want to know not only what the money was spent on but will also want proof it was spent. Being able to back up your claims will be key to successfully being able to deduct your business expenses from your business’s taxable income.
Don’t go into debt to run your business
If at all possible, avoid going into debt to run or expand your business. If you are finding yourself short on cash flow cut expenses and make the budget balance. You balance your budget in your personal life and same must go for your business life!
These 6 tips can help ensure that you are on track to keeping your books balanced all throughout the year. It can also save you hours of headaches before taxes are due trying to balance everything in the last few days before you have to send your taxes in to the CRA.
For more information on why you should be on top of your bookkeeping all throughout the year, please feel free to contact us for further assistance.
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