Stop the Chaos in Your Business Accounting

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stop the chaos in your business accountingPlease know that I am a business owner, not an accountant, and I’ve had multiple offline business and an online business, thus my recommendations in this post should be viewed from that perspective.

As a business owner I’m required to pay taxes and keep good records. Since you are a business owner, or desire to be an entrepreneur, it’s important to be aware of what is required of you so that, if there is a gap, you can stop the chaos in your business accounting.

Running a business requires that you wear many hats, and for many business owners it’s easy to get sloppy with paperwork and lose valuable documents, like receipts, airline tickets or vouchers for business travel, and so forth. Being disorganized can make preparing for your appointment with your accountant or bookkeeper a nightmare! Or your appointment may be with yourself and your accounting software. Either way, running around searching for receipts is not fun. It’s energy-draining, and robs you of time you could be spending on your business.

Two things can happen when we fail to keep good records:

From the law’s viewpoint:

  • You lose legitimate deductions because you have no proof – written records to support the deductions you want to take
  • In the event you’re audited, you could be charged additional money because of having insufficient proof to support any claims or deductions you may have made.

From your business’ viewpoint:

  • “If you don’t know where you’re going, any road will get you there.” Lewis Carrol. In order to know if you’re meeting your monthly, quarterly, semi-annual and annual goals, you must be able to track them. Having a money goal, you should have a way to know where you are in relation to your goal, and what you need to do if you’re not on track.
  • An easy way to do this is to use a post-it note, a note card, or a sheet of paper. Prior to the beginning of the month you write your money goal for the month: $1,000, $5,000, or $10,000. That’s your monthly income goal. You would have your Marketing Plan for the month so that you know what you need to do to achieve the goal. Each time you make a sale or a client pays you money, you subtract it from your starting figure. You then either make an entry into your accounting software or record the transaction in a book or register.
  • By keeping track of your finances through your accounting software, manually, or through your bookkeeper or accountant, you will know if you’re happy with where you are, or if you need to make adjustments.  You can determine if you should be doing more marketing, sales, and striving for better client and customer retention.

Removing the chaos from your accounting means better organization. Here are three easy tips you can start implementing today.

  1. Make Bookkeeping a Regular Part of Your Routine

You may choose to do your bookkeeping once per month, but I’d strongly recommend you not do that unless you have a secure filing system where you keep your documents dated and in order. The reason is that it’s easy to forget to enter certain debits and credits if you’re trying to rush through and do a bunch of bookkeeping at once. What’s more, it’s much harder to find a mistake if you have multiple months or even a month of entries in front of you. Remember that you want to take the chaos out of your accounting or record-keeping.

Instead, make time to take care of your bookkeeping on a regular basis. I know the angst and headache for failing to keep to this routine. Wading through boxes of receipts and trying to sort through papers I did not remember storing. At the very least, get into the habit of taking care of your bookkeeping regularly. Enter all debits and credits into your software the same day they come in. At the very least, you should do this on a weekly basis.

2.  Print Your Receipts and File Them Immediately

Many of us shop a lot online; we purchase airline tickets online, and we pay for training online. So we often don’t print the receipts as we know which vendor we purchased items from. But, why wait? This is something I personally have to start doing because I store the receipts online for most of my purchases. Since I’ll need them for tax purposes, it makes sense to just go ahead and print then file them immediately thus eliminating the process at the end of the year or whenever I have to present them to my tax preparer. How about you? How do you currently handle this part of your purchases? Do you need to make changes?

  1. Know the Tax Deadlines for Your Country of Residence

For example, in the United States, the tax deadline is April 15 of each year. However, as a self-employed business owner, you should also know the deadline for paying estimated quarterly taxes. Visit www.irs.gov for accurate information. If you live in another country, it’s important to know the tax requirements there as well. Become familiar with the dates and deadlines and make sure to prepare ahead so you reduce stress and anxiety.

Having your own business is wonderful, but it’s almost impossible to do it all alone without wearing yourself out or getting burnout. Removing the chaos from your accounting by staying organized and using the services of a professional will go a long way in helping you keep your sanity and have fun in your business.

How do you personally keep organized? Please share your tips in the comments below.  If you found this post helpful, please share with your friends.


Comments

Stop the Chaos in Your Business Accounting — 11 Comments

  1. Tracking spending is definitely not one of my favorite things to do, and more often than not I put it off. However, I see its crucial importance, and I need to woman up and take control of the situation. I’ll definitely start looking for accounting software, so thank you Yvonne for the tips you’ve given above.
    Davina recently posted…5 Simple Ways To Boost Social Media EngagementMy Profile

    • Yvonne A Jones on said:

      You and I both, Davina. But I try much harder these days as I know only too well the things I wrote about – anxiety, wasted time
      and losing valuable deductions because I misplaced the proof. We owe it to ourselves to implement the strategies mentioned in my post
      and eliminate the additional stress that can be brought on ourselves. 🙂

  2. Which suddenly reminds me that our TAX RETURNS in S.Africa are due in 10-days time and I haven’t even looked at it 🙁

    I need to look at a better system moving forward, as scanning documents to file online is time consuming and frustrating (damn scanner). Having to print stuff just to file it is a waste of paper (resources) & ink…

    Most of the time, I use my Bank Statements to prepare my Tax Returns, so it’s important that I use my account transaction references correctly. The problem with this, is that no matter how many times I ask clients to use the ‘given’ deposit reference they always tend to do there own thing.
    Duane Reeve recently posted…You cannot make money Blogging! You need to sell…My Profile

    • Yvonne A Jones on said:

      Duane,

      Is that tax time for everyone or for business owners? You know, I used to use my Bank Statements to prepare my tax returns and it was a mess. Reason? i kept mixing funds. So, if you’re organized and that works for you, that’s great. I believe that whatever saves you the most time.

    • Yvonne A Jones on said:

      Hi Duane,

      It that the tax time for everyone or only for businesses? Using your Bank Statements will help as there’s usually so much more, but it can only be an asset if you have a special account for your business. For years my Tax Preparer pointed out the importance of keeping my money separate. Doing that eliminates so much headache in trying to identify business expenses and other. Based on what you said about your clients not using the correct reference, you may have to find an alternative solution that works for you and saves you time.

    • Yvonne A Jones on said:

      Thank you, Mike. I always appreciate your visit and support. Stay on the road to recovery. 🙂

  3. Yvonne, I must admit that I am a put-it-in-a-tax-box guy. It drives my wife nuts! At the end of the year I sit down and categorize everything. I must admit that it is a hassle. Your method sounds much better!
    Roy Miller recently posted…Do You Need A Coach?My Profile

    • Yvonne A Jones on said:

      Roy, There are just some wonderful organized, put-it-in-a-box people out there, and you’re definitely one. 🙂 The only change I would make is that instead of waiting until the end of the year, may I suggest you categorize them weekly or at the very least monthly? Thanks for stopping by. My welcome mat is always waiting for you to visit my home on the internet, and I appreciate your visits.

  4. A great article for those new to business to ensure they don’t get into a mess when it comes to doing tax returns. Getting into a workable routine can be a bind when there is so much more interesting things to do. Problem is it can come back and bite you in your time management and your pocket if you never keep your receipts and expense claims organised.
    Terry Jenkins recently posted…13 Ways to Naturally Reduce High Blood Pressure (Hypertension)My Profile

    • Yvonne A Jones on said:

      Putting Off keeping good records will definitely come back to bite you as you said Terry. It just makes sense to make the time and do it right from the beginning. Thanks for your comments.

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