As a business owner, your life is going to be jam packed with ups and downs. Many small business owners learn by making mistakes, and sometimes you’ll get advice that you wish you’d known about at the very start of your entrepreneurial journey.
When it comes to accounting and tax for your small business, there is plenty of room for mistakes that could end up being very costly. When it comes to tax, it’s best to make sure that you have all the information you need from the start, to ensure that you don’t make mistakes that could be disastrous for your small business finances.
The good news is that we’ve put together some top tips to help you get started on the right track when it comes to small business accounting. Read on to find out more.
Tip #1. Hire an Accountant:
If you can afford to, hiring an accountant is the best way to make sure that everything is above board with your small business bookkeeping. Bookkeepers and accountants often don’t have to be full-time employees; you can hire somebody on a part-time basis to do this task for you, whilst many of them work as freelancers, which can be even cheaper.
If you know nothing about accounting and have little experience with small business taxes, trying to do it by yourself can be a very risky move. If you are able to, investing in an accountant for your company will be very worthwhile.
Tip #2. Keep Your Business and Personal Finances Separate:
If you hire an accountant, the first piece of advice that they will give you is to separate your business and personal finances as much as you can. This can be tricky if you’ve taken a personal loan out to help fund your business, for example, but it isn’t an impossible task.
Opening a new bank account solely for business finances and transactions is a key first step to getting started on the road to looking after your company’s taxes. It’s essential for keeping everything organized, and will make everything far easier for both you and your accountant when the deadline for filing your tax return finally comes around. In fact, every financial aspect of running your small business can quickly become more difficult if you do not separate your accounts. Bookkeeping, tax forms, and even invoicing can quickly become a nightmare if you have to search through all your personal transactions as well.
Tip #3. Use Good Accounting Software:
What do you do if you’re not in a position to hire an accountant to look after your business books? The good news is that you are not alone. Today, there are several tax and accounting programs designed to help small business owners better look after their tax affairs. What’s even better is that these programs are made with novices in mind, making them easy for anybody to use even if you have little past experience of the process.
For example, Quickbooks Inventory is a very popular piece of tax and accounting software used by small, medium and even large business owners for looking after their books. The software allows you to track your income and expenditure, invoices, and more in one easy place, providing you with all the information that you need at your fingertips to easily and quickly make your tax return when the time comes.
Tip #4. Maintain Neat and Efficient Books:
One of the best things about using accounting software is that it makes it easy for you to maintain neat and efficient books for your business. In fact, you may even find that if you hire an accountant, they will use this type of software themselves for keeping everything organized.
Efficient, organized bookkeeping will ensure that your daily tasks are easier to handle, in addition to easier organization when it comes to the larger and often more stressful financial tasks. There are several ways to make sure that you keep your books organized. Utilize a range of free software packages to keep a track of everything, or if you can, hire somebody to look after this aspect of your business for you.
Tip #5. Be Aware of Tax Deadlines:
If you’re managing your own business accounts on top of doing everything else, it can be all too easy for tax deadlines to creep up on you. Being aware of tax deadlines is hugely important as not only will it mean that you’ll be able to give yourself plenty of time to get everything organized on time, you’ll also avoid hefty financial tax penalties if you miss the deadline.
Bear in mind that tax forms which are filled out incorrectly due to rushing or have completely missed the deadline can quickly incur costly fees and fines, which can be terrible news for a small business running on a tight budget. In addition, the longer you leave it after the deadline to file your tax return, the more it will cost you as daily interest charges will be added on. So, come up with ways to make sure that you know exactly when the deadline is – write it on your calendar or set reminders in your smartphone for a few weeks before. Hiring an accountant is the best way to make sure that you don’t miss the deadline, since they are sure to know when it is.
Tip #6. Keep Track of Business Expenses:
Last but not least, making sure that you keep a careful track of your business expenses will ensure that you’re not missing out on money that you could be claiming back. Keeping hold of all your receipts can be a tedious and tiresome job, but it’s certainly worth it in the end. Don’t forget that you can also claim back for expenses such as mileage and gas if you regularly use your car to meet with clients or attend business events.
In addition, those who work from home may be eligible to claim for all or part of their expenses such as electric and gas, water, broadband and telephone, and even their mortgage or rent costs.
Did you find these tips useful? We’d love to hear from you.
Add Comment