A blossoming entrepreneur needs to focus where the money is — attracting new customers, building your brand and fine-tuning your website. However, if your finances get ignored as you deal with these essentials, tax time can feel like a nightmare. Without the right preparation throughout the year, tax time may involve drowning in unorganized receipts and faded memories, facing an unwieldy tax bill or both. Before you move forward with your business, it’s critical to review the basics about accounting software and financial organization.
Track Everything with Accounting Software
Unreported income or invoices can ultimately get you in trouble. If you fail to report income, the IRS can hold you accountable and give you a tax bill that may include fines and penalties. On the other hand, failing to report expenses makes your income look larger than it is and thus unnecessarily increases your tax burden. To avoid either of these scenarios, you need quality accounting software. Before you open your shop for business, invest in accounting software like QuickBooks that allows you to easily track income and expenses.
Set Up a Dedicated Weekly Finance Meeting
Throughout the year, it’s tempting to throw receipts in drawers or to commit certain expenses to memory rather than paper. Unfortunately, this laissez-faire approach to accounting almost certainly results in things being overlooked and forgotten.
Schedule a time once a week during which you recap your finances — although this weekly time can certainly be with an accountant, it can also be you alone with your accounting software. Surprisingly, you only need about 15 to 30 minutes for this task, and the commitment does much more than prepare you for tax time; it also helps you gain insight into your business’s financial well-being.
Using QuickBooks software, you can generate accounting reports on your profit and losses, create balance sheets and more. With that info organized and accessible, you can make informed decisions about where you want to focus, what’s truly working and what needs to be changed.
Balance Financial Separation and Integration
When you are at the office supply store with a stack of business and personal goods in hand, throwing it all on the company credit card may seem like the easiest thing to do. While it may save a few seconds at the cash register, it eventually makes accounting messy and hard to untangle.
Instead, diligently separate all of your expenses. If you can’t do that easily with separate cards, tracking your expenses, receipt by receipt, becomes even more important. To that end, you need the QuickBooks app that allows you to take a quick photo of your receipt and then uploads the info to your accounting spreadsheets for you.
While separation is critical, so too is integration. A software program like QuickBooks has the ability to connect to over 2,000 financial institutions in the country, and you can also automatically integrate data from sources such as PayPal or Square. The more your accounting software can do automatically, the more time you have to devote to the rest of your business.
Choose Your Accounting Software Carefully
There is a range of small business accounting software packages; to streamline your accounting process, you need to choose yours carefully. QuickBooks Desktop has long been a favorite of small business owners, especially those with multiple clients, vendors and employees, but if you prefer to engage in the cloud, QuickBooks Online may be the better option for you.
If you are an independent entrepreneur, QuickBooks Self-Employed offers the basic organizational tools you need to prepare for tax time and track your expenses throughout the year. Also, regardless of which type of program you select, QuickBooks stands by you as you grow with payroll, invoices and online payment processing services.
Running a business should be fun, but a few small accounting errors can quickly put a damper on that fun — especially if the government shutters you for unpaid tax bills. Before success and cash start rolling in, make sure you have the accounting software you need in place to track, organize and understand your business’s financial picture.