Tax season can be a stressful time for home-based business owners that do not keep up with their monthly bookkeeping. Want to make tax time easier? With these simple bookkeeping ideas, tax time can become a much faster process.
One of the most common problems home-based business owners face is keeping track of their revenue and expenses on a regular basis. The tendency is to throw everything in a pile or file folder until “later.” Unfortunately for many, later only arrives when it is tax season which adds stress and can take a considerable amount of time.
The ultimate solution to Bookkeeping for your business is to outsource it. Doing bookkeeping does not grow your business. You should spend your time only on revenue producing activities. If you don’t want to outsource your bookkeeping, following are some steps that might help.
The first step to staying on top of your bookkeeping is to create a file system for billing and receipts. Itemize folders and file items immediately so they are readily available when you do your bookkeeping work.
The second step is to set aside an hour a week strictly for bookkeeping purposes. If you invest in a bookkeeping system such as Quickbooks, you can enter your neatly organized revenue and expenses and create statements which allow you to see at a glance how your business is performing. Not only will you know what your expenses are and when your payments are due, you will know if your business is turning a profit or not, and what areas if any need your attention.
By following these simple tips, not only will you have a clear picture of the overall performance of your business, you will have detailed income statements for your business. When it comes time to prepare your tax return, you simply print a year-end statement and everything is itemized and ready for you to enter on your return. Tax preparation becomes a minor process rather than a stressful and exhaustive production which takes many hours out of your busy schedule to complete.
Following these simple tips will not only save you time, they will save you considerable expense, especially if you have your taxes done professionally. The added benefit is the ability to see how your business is performing, and having the opportunity to make adjustments as necessary to increase revenues or decrease expenses in order to increase your bottom line.
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Great roadmap Tom for optimizing the bookkeeping and tax prep process. I found QB to be a big program with lots of overhead, for my younger business, plus sharing files with my bookkeeper and tax accounting staffs were too techie, the most recent month end closings were 30 days old–not the best for forecasting.
Nowadays, I’m using cloud service accounting offering from a firm that has bank feeds that record the transactions in near-real time. It ‘learns’ my transaction categories, saving me 45mins/week on reviews. The same files are available to all my accounting staff online, so no file sharing and data importing duties.
Thanks for sharing your tips, an ounce of prevention theme for the procrastinators. Doug
Thank you for your comments.