Keeping your business finances in order is fundamental to your business success. Many businesses go down the drain because their owners miss IRS deadlines or spend more than they earn. Especially for small businesses that may not realize high profits, being able to track spending and knowing the areas that need improvement, is very important.
These are a few strategies you can employ to keep your business finances in order:
- Hire a professional bookkeeper
Hiring an accountant will allow you to file your taxes on time, thus eliminating the possibility of a penalty and interest charges by the IRS. However, qualified accountants are generally expensive to hire and, if you are not making big profits, it would be costly for you. You may hire a part-time bookkeeper or subcontract your bookkeeping to a qualified accounting firm to make sure that you will file complete and accurate financial statements and timely tax return to the IRS.
- Know your tax responsibilities
Depending on the state that your business operates and the type of business you have, your tax responsibilities will differ and may include federal, state, and local taxes; corporate taxes; sales or use tax; or others. If you employ regular personnel, you may need to have workers’ compensation or other insurance requirements. Make sure to know your tax responsibilities before getting an IRS notice. Consult with the IRS and ask them what your tax responsibilities are based on your business activity to avoid any penalties, interest, and fees. Missing IRS deadlines can only make the situation worse and costlier.
- Separate business from personal expenses
Some business owners use a single credit card for their personal and business expenses, considering that they can have better control over their business finances. However, mixing business and personal finances can only lead to huge confusion. Tracking your expenses will be time-consuming and complicated. Alternatively, you can open a business bank account and track your business expenses separately than your personal transactions. Furthermore, you will able to sort your business transactions on a quarterly or yearly basis.
- Keep operational budgets
It is very important to know what you spend and what you earn. Write down your business expenses and the money you expect to come in from different sources. Each season is different; some are slow while some are extremely busy. Anyhow, you need to know how your business does and what adjustments you need to make.
- Use a proper accounting software
More and more small business owners are using accounting software to keep an accurate track of their business performance. There is a number of accredited and reliable accounting software in the market, which can help you keep your finances computerized such as QuickBooks or AccountEdge. Regardless of the accounting software, you minimize human error and you save money from hiring a bookkeeper or a tax preparer.
At the end of the day is your choice to select the best strategy for keeping your finances in order. Excel and accounting software are your allies in this venture. Just make sure to keep all receipts and of course, don’t forget to get paid!
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