101: Streamlining bookkeeping for small businesses
In 2022, the U.S. Internal Revenue Service collected $475.9 billion in income taxes from businesses, with 81.2% of all filings completed electronically. Whether you file your own taxes online or use an accountant, here are some tips to help make tax season easier.
Separating your personal and business expenses is the first step to organizing your accounts. Opening a business-only credit card is one way to make tax prep easier since all business expenses are recorded on one card. A business card allows a company to build credit, track expenses, and increase future borrowing potential through good credit, says Katherine Fan from NerdWallet. She recommends establishing an accounting-exclusive email to further separate incoming bills.
Regular financial checkups make bookkeeping more manageable. Instead of trying to do your bookkeeping all at once, do it consistently throughout the year. Taking bite-sized chunks out of the accounting prep will save you from rushing at the last minute, writes Rieva Lesonsky from SCORE. Early preparation will allow you to rectify bounced checks, double check for errors, and ensure customers have paid overdue invoices. A quarterly, in-depth review will provide the consistent oversight you need to be ready for tax season.
Selecting the accounting software right for you. Options such as TurboTax, H&R Block, and e-File have brought the accounting office into people’s homes. With various prices, tools, and packages, it can be hard to select the right accounting software for your company. The first place to start is evaluating the available features, such as online support with accounting professionals or integration with your bank, says Adam Uzialko of Business News Daily. “You may also want to determine if the software can help you easily calculate and pay taxes,” he writes.
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