Most people think of Accounting and are tempted to include taxes or bookkeeping at the bottom of their priority list. Let’s be honest we want to think about making money in our business and accountants cost money right?
But following the right procedures with accounting can actually set your business up for success, and because of that we have put together a list of the top small business accounting tips and tricks.
1. Keep Business Accounts Separate from Personal
If you haven’t already, you will need to start to separate accounts and have a dedicated business bank account for checking and savings. This will save you tons of man-hours when it is time to prepare your business tax deductions.
Remember, you cannot deduct personal expenses on a business tax return, the only personal you can deduct is property that is used like your car or if you run a home office, even then you will only be able to deduct the portion of time you use the property for the business. Otherwise there is a penalty that can be as high as 75% of the additional tax amount that you owe as a result of this costly error.
2. Track Expenses
Document and categorize each and every expense to assure that you take full advantage of all write-offs and credits. Pennies add-up to dollars and it is easy to run out of money.
To simplify this step use the business credit card for every purchase and you won’t have to worry about having a pile of little papers to go through. If you use a card that earns points you will also be maximizing your rewards and cash back for your business spending.
Accounting software is also helpful as they can help you to store copies of checks and invoices. When cash is the only way to pay, accounting software can now help with that too… Yes, there is an app for that!