Getting documents organized and ready for your accountant can be a stressful time for small business owners, but it doesn’t have to be. Don’t let the paperwork overwhelm you. Start the New Year off right and reduce the stress in your life by following these helpful tips.
First, if you haven’t done so already, invest in a computer program to keep track of all your income and expenses. It is worth the investment and there are several different types of computer software–QuickBooks, Quicken, and Peachtree to name a few. (I personally like QuickBooks)
Second, begin organizing all the paperwork/receipts similar to how the items are categorized when you file taxes. For example, if you file a Schedule C Form 1040—group your expenses into advertising, car/truck expenses, etc., and create file folders by the same name. File the receipts as you receive them and keep the most recent receipt towards the back.
Third, you should ALWAYS keep your business and personal expenses separate. But, if it does happen that you need to use your personal account for a business expense, don’t throw that receipt away. That’s a write-off you’re throwing out the window! Keep the receipt by placing it in the appropriate file folder and mark it as “paid out of personal account” as a reminder to add it to your buisness expenses at the end of the year.
Fourth, if you use your vehicle for business purposes write down the mileage of your vehicle at the beginning and end of the year. Then each time you travel for business write down the odometer mileage at the beginning and end of your trip. Keep a notebook in your vehicle at all times that is specifically for tracking mileage only.
Finally, when you turn in your books to your accountant ask questions and lots of them. Make sure you are getting every tax break you DESERVE! Listen to your accountant about any new tax changes that may affect you and ask for advice on how to plan for next year.
The key to successful bookkeeping is ORGANIZATION. If you are not good at organizing or it is not something you enjoy doing, than hire out so that it is done correctly and, most importantly, you can spend time the way you want!
A tax refund is not a gift from the government. It’s your money that you loaned the government interest free! ~Dave Ramsey