I don’t think anyone sets out in business to have bad habits, but it happens to the best of us. We get busy, or we just don’t know any better what we are supposed to do.
Receipts get thrown away, we get behind and haven’t done our bookkeeping for months, or we wait until the last minute to throw things together for our tax return.
However, when it comes to record keeping, your bad habits could be costing your business money. If you aren’t clear on how much money you’re bringing in, then you are setting yourself up to overspending. The biggest hits usually come at tax time, because you are missing big deductions or weren’t prepared for your tax liability.
Fear not my fellow business owners,
Here are Four Tips to get your business record keeping on track and cut those losses:
1) Set up a Separate Business Bank Account
The law varies depending on your type of business entity, but the reality is you should keep your business and personal finances separate. Most banks offer low cost checking accounts you can open and use solely for business. Just having all your business transactions run through their own account will help you keep your business and personal finances separate, which is important. It will also give you the most basic look at what money is coming in and out of your business.
2) Use Accounting Software
There are some great options out there that range in cost from Free up to $100’s per month depending on the size and complexity of your business transactions. Most have a free trial. Try testing a few to see what works for you, or talk to a bookkeeper to see what software they would recommend for business size and type. A few options you might consider are Wave Accounting, Freshbooks, or Xero. Even if you are using a simple spreadsheet, that is a step in the right direction.
3) Scan Your Receipts
Receipts are the proof that your expense was indeed business related. In our world of technology and smartphones, there is really no excuse to not having record of your receipts. Many accounting softwares now have receipt scanning built-in, so you can snap the receipt on your smartphone and it auto loads into the software. You can also use Evernote to snap pictures of receipts to save in your digital filing cabinet. I strongly recommend storing your receipts in digital form. This way they won’t fade, degrade, or get lost as easily (We all know how tricky they can be!) Plus with all of the things we buy online, most of our receipts are already digital.
4) Hire a Professional Tax Preparer
DIY Software is great for many people, but if you aren’t sure how to answer the automated questionnaire then you’re out of luck and it won’t think the ask the questions a tax professional will. As much as we all want to be able to save money and do it ourselves, you’re not a tax expert. How do you know what is and isn’t deductible; how to properly depreciate vs deduct; whether or not you need to file 1099’s for those you have paid but weren’t employees; or how much to pay in estimated taxes? If any of those terms confused you, that is good sign you want to work with a professional, and save the frustrations of trying to do it yourself.
Hello there, I’m Melissa Whaley, owner of Whaley Bookkeeping. I specialize in virtual bookkeeping and tax preparation for entrepreneurs. It excites me to help people understand and take control of their finances, especially in their businesses. I believe that anyone is capable of success if their passions are accompanied with the right tools. I love working with new business owners to help them set-up systems that will take the stress out their finances.
I am a licensed tax preparer in the state of California and have been helping small business owners since 2009. I am a Wave Accounting Pro, Quickbooks Online ProAdvisor, and Freshbooks Bookkeeper.
You will often find me drinking a cup of coffee while hanging out in Facebook Groups, or on my YouTube channel making videos to help Etsy sellers with their bookkeeping. In my personal life I am married to a wonderful husband, have a 6 year old daughter and a 1 year old son.