Bookkeeping is an essential function for all businesses. It helps a business owner:
1) maximize profitability by having an accurate picture of the company’s financial position for decision making purposes and planning for the future, and
2) to be ready for tax time at year-end. If you’re organized, filing your tax return will not be an anxiety-causing experience.
Important points to keep you organized are:
· Document your mileage on a calendar or a simple spreadsheet. Mileage can be a valuable deduction on your tax return at $.51/mile for 2011 and is often overlooked.
· Keep and record your receipts and be diligent about it. Your business expenses are how you reduce your taxable income on your tax return.
· Create file folders for your receipts/important documents for each business and file them. It is important to be (and stay) organized from the start-up. Start with this:
o Advertising and promotion
o Automobile mileage or expenses
o Credit card statements
o Dues and subscriptions
o Education and professional fees
o Miscellaneous
o Office supplies and equipment
o Postage and shipping
o Printing and reproduction
o Rent or home office expenses
o Taxes and licenses
o Telephone
o Utilities
· Decide how often you will bill your clients, i.e. monthly, bimonthly, etc, and do it on a regular basis. Pick a day and schedule time to send your invoices as if it’s a business appointment. Your clients will appreciate the consistency and you will have better cash flow!
· If you have employees, a payroll service can register your business in advance of paying wages and have all the required paperwork in order. I can be an invaluable resource to you in handling payroll and payroll issues and have saved my clients money by switching to my service from ADP or Paychex. One client was paying between $175 & $200/month for payroll in a regular month (not a quarterly reporting month); I offered him a flat rate of $100/month, which does not vary from month to month. You don’t want to have to deal with the IRS or State Dept of Revenue because of late or missed tax deposits or inaccurate reporting. Penalties can be hefty.
· What’s the highest and best use of your time? Decide who will perform the bookkeeping functions for you and when making this decision, think about what your time is worth. If you are spending a lot of time doing administrative tasks, are you spending enough time doing what brings in clients and makes you money?
o If it is you, don’t procrastinate! Procrastination is not the best use of your time. Have your bookkeeping system ready now. I can help you set up your system and teach you how to use it.
o If you are hiring a bookkeeper to help you, make sure you are working with someone who will work with you. A bookkeeper on your small business team will help you start off with a good record keeping system, handle financial transactions, and produce financial statements. You will be freed up so you can spend time doing what makes you money!
· If you find yourself getting behind in your record keeping or are unsure of what you need to do, GET HELP!
