6 Steps to Catch Up on Bookkeeping
There are countless tasks that small business owners have to juggle to just be able to operate their business. Some of these tasks being daily operations, marketing, sales, processes, products, management and more. These tasks can become very overwhelming for small business owners. Many day-to-day tasks of owning a small business might change or differ based on industries, bookkeeping, however, does not.
Every business involves bookkeeping to some degree. Bookkeeping that is delayed or not accurate can become a huge disaster for a business. If you want your business to grow, secure capital, or if you even want to file taxes correctly, you have to have up-to-date books.
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If you suddenly find your finances are a mess, you’re probably wondering then how you got here and how to catch up on your bookkeeping. Choosing to go with a professional bookkeeping service will help you grow your business and stay on top of your records.
Let’s say, however, that your finances are already a mess. There are steps you can take now to get out of that financial disaster before hiring a bookkeeper.
Get Your Receipts Gathered
If your receipts are all over the place, you need to gather them up. Any receipts, invoices, and other financial documents that are related to your business such as bank statements, credit card statements, business expenditures, customer accounts, vendor accounts, and anything else that is related to finance within your business.
Bank Account Reconciliation
Take some time, sit down, and go through your credit card and bank statements. These statements need to always match your business records, vendor accounts, and customer accounts. If there are any discrepancies, find the error immediately. Human errors and discrepancies are common issues for business owners who aren’t using a team of professionals.
Personal vs Business Expenses
Another important step is taking measures to prevent your books from becoming even messier down the road. If you are already separating your personal and business expenses, that is great. If you aren’t, you need to separate those expenses in order to keep your books up to date. It is highly recommended that you keep all bank accounts, credit cards, and other finances separate.
Accounts that are tangled up together can create unnecessary stress when you are doing your bookkeeping or taxes.
Leaving paper behind will make your life as a business owner much easier when it is time to update your books. There’s never a better time than right now to go paperless and transfer over to digital records.
Gather Tax Documents
Tax season is an extremely important time of the year for everyone, but especially businesses. You should have all of your forms for the tax year gathered and collected. This includes W-2 forms for employees and 1099-MISC and W-9s.
Review it with a Professional
Once you are caught up on your bookkeeping, it is strongly recommended that you use a tax professional to review your documents. Tax professionals can aid in removing stress from the tax season and help you verify your financial information related to your return.
Using a tax professional can also help you ensure that your business receives the tax deductions that you are entitled to. Most tax professionals provide guarantees in the event that an audit occurs that they will represent you.