So, you’ve launched your business! Congratulations! YOU ARE GOING TO KILLLLLLLL IT!
You’ve poured your time and money into this amazing venture. Maybe you’re already making money. * high-five *
As you know there were chores to starting up your biz, like the formation of your LLC, for instance. Welp, there are chores involved with the ongoing income and expenses too.
There is no stopping a new calendar year from beginning. January 1 rolls around and most of us equate that to tax season after we’ve put on our ridiculous New Year’s hats & clinked our champagne glasses (or whatever you’re into).
Now that you’re a business owner tax season is going to go a little bit different. You’re not just receiving a W2 form from your employer and filing your taxes. You must now have all of your expenses categorized into acceptable categories by the government to offset all of this MOOLAH (cash/diñero/capital/coin/dolla billz) you are swimming in a la Scrooge McDuck.
Now – here is what I know from previous experience with a small business venture of mine and also what I am hearing from literally all of my bookkeeping clients.
· You start the year off with the goal to stay caught up on your books
· Tax filing ends in April and you’ve been doing backlogged work because you didn’t keep up with it the prior year
· Soon it is June and you say to yourself “I’ll get started on it before August.”
· Your business is booming
· Life happens
· Thanksgiving is approaching and you’re experiencing a weight on your shoulders as you schedule your holiday travels with family and friends. You think “I really should take the time to get my books up to date before December 1”
· As we all know, there is a lot to do at the end of the year personally and professionally – your business doesn’t stop and social gatherings are at an all-time high
· Christmas is here and gone, and as you know, we are ringing in the New Year just seven days later
And that is the tax time procrastinator hamster wheel.
It doesn’t have to be this way, though.
I have lined out eight tips so you can stay caught up, know where your business stands throughout the year, and make the right decisions to maximize your deductions.
You’re either paying more in taxes or you’re pouring more money back into your business. But you’ve got to know where you stand to make those decisions. Which is IMPORTANT.
When you are prepared and in the know about your business finances, the guilt, shame, and weight around this seemingly tedious task dissipates.
Here we go:
8 Tips to Staying Current on Your Books
1. Keep your personal & business expenses separate.
Open a business bank account and run all your income and expenses through that account. Sure, as a business owner you will occasionally charge an expense on your personal debit or credit card. No biggie. Those expenses will be easy to locate and categorize at the end of year. Or monthly, quarterly, twice a year – however you’d like to do it.
2. Invest in the right software.
I use QuickBooks Online. Yes, there is a monthly charge. But it isn’t that expensive. With QuickBooks you can connect your business bank account and business credit card and categorize your money as it comes and goes.
The software has pre-logged categories recognized by the government to make the setup process a breeze. It’s easy to use. You can add your own categories if needed to better suit your business. It will produce your P&L, Income Statements, Balance Sheet – ALL THE THINGS – everything that you need to be aware of your finances.
3. Go digital as much as you can.
We are in a digital world, what can I say? The more digital you are, the less manual entry you are doing, the better tracking you are receiving, and overall, less time spending on this task that you already may loathe.
4. Automate any A/P or A/R tasks that you can.
Let’s put more time back into your life – automate anything you can. Autodraft your utilities. Do you have a client that you invoice the same amount to monthly? Cool! Set up invoice automation in your QuickBooks. Set up your contractors and some of your NET-30 vendors for direct deposit.
5. Input recurring transactions in your calendar for reminder.
Let’s say you have a client that wants a paper check – there still exist. Pull up your calendar and schedule it so you are reminded. When scheduling you can select monthly or weekly and then it will auto populate for as long as you tell it to.
This is also good for scheduling weekly or monthly team meetings. That way they do not get lost in your long to-do list + ACTUAL LIFE.
There are other uses for this as well. For instance, if I have asked a client to pay a deposit and then need them to pay the remaining balance five business days prior to service, then I will set up the reminder in my calendar, so I do not forget to get paid. No client is going to come to you and say, “Hey, I need to pay you.” Life is happening for them too.
6. When you hire a new contractor get their current W9 on file and set up 1099 tracking on your bookkeeping software.
So often business owners are chasing down government forms – such as W9’s – at the beginning of the year. If you wait too long it becomes urgent… and honestly makes it look like you don’t have your sh*t together.
If you have the form that on file before you even write their first check, then you can enter that information into your Quickbooks account and turn on 1099 tracking This means that Quickbooks will be tracking everything you pay them for easy tax filing. THE TOOL DOES IT FOR YOU. USE THESE TOOLS.
7. Schedule a weekly time to review and reconcile.
I say weekly because if you stay on top of it – depending on how many transactions you are running through your business – you could easily have your transactions categorized and feel tax ready.
Expenses are easier to place when they are fresh on your mind. Your review could take as few as 20 min each week. You could also do this biweekly, monthly, or quarterly – but know the longer you wait the longer it takes.
So, put on your favorite show that you’ve seen 100 times, you know the ones that you know every word to, and just knock it out every week.
8. Delegate your bookkeeping to a specialist.
I’ve heard things from clients like “it doesn’t make me money, so I don’t like doing it,” and “I hate that kind of work.” If you loathe bookkeeping, computer work, staying organized, etc. then hire someone to do it for you. It will be worth that weight being lifted from your shoulders.
My hope is that these tips will point you in the right direction and help you to not feel so overwhelmed. You’re already crushing it – don’t let your bookkeeping crush you.
If you feel overwhelmed by the dollars and decimals, or that you are better off focusing on the customers your serve and leaving this to someone else, reach out to me. This is my wheelhouse.
Let me help keep you kosher with the tax man, and you focus on what you do best.
<3
Shea
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