4 Bookkeeping Tax Season Headaches and How to Avoid Them
Most businesses dread bookkeeping tax season headaches, but it doesn't always have to be so painful. In addition to driving your business forward, having a solid bookkeeping system can prevent tax time issues. Never underestimate its power; it’s the behind-the-curtain magic that keeps your company thriving throughout the business year!
Here are four tips on ways to make sure you are prepared for when tax season rolls in:
1. BOOKKEEPING SYSTEM
It’s tempting to try and get away with just keeping receipts or occasionally writing down basic details of big ticket purchases or deposits. While it might seem like overkill to create a meticulous system in the early stages of your business’ growth, a system is how you grow. You’ll have insights into trends (good and bad) and it will help ensure you are achieving or exceeding your goals. Don’t wait until you’re trying to scale, create your system right from the beginning.
2. ACCOUNTING KNOWLEDGE
Accounting is based on certain principles and rules. Take the time to know them so you don’t fall into an avoidable pit. Knowledge arms you with the necessary tools to secure the future of your business.
3. TAX METHOD
Selecting the right accounting method—cash or accrual—will help keep your books on point throughout the year. Most businesses will be cash, but certain industries, such as food and beverage, product distribution or manufacturing sometimes choose accrual in order to anticipate future income or expenses. Know your method and keep your books accurate.
4. COMMUNICATION WITH YOUR BOOKKEEPER
Keeping an open line of communication with your bookkeeping professional is paramount to your business’ success. By providing receipts, purchase invoices, etc. to your bookkeeper, you keep them from guessing. And by keeping them in the loop of upcoming business trends (i.e. future large purchases), you’ll keep them from wasting their time and your money.
Being strict and disciplined with these tips will help avoid bookkeeping tax season headaches, strengthen your bottom line and take your business to the next level. If your small business needs help in keeping your finances on track, please consider our bookkeeping services - we'd love to help!