3 Bookkeeping Strategies for Growing Business
Well, it’s spring in the Northwest and it’s beautiful. It makes me want to clean house and plant flowers! I can feel life coming back into my body again– It was a long winter.
Most of my businesses that I work with are ready for some spring cleaning as well. We have come through the hectic, end-of-year W-2’s, 1099’s, prepare the books for the CPA’s and EAs. Some of them have gotten the good or bad news of 2014 estimated taxes they should pay this year. They are looking toward the future and strategies to grow, along with ways to keep more money in their pockets.
I have put some thought into what those strategies should be. I tried to get clever and say something new, but I think it really boils down to some simple, tried-and-true strategies. Of course, there are always ratios and spreadsheets for planning that can be helpful and you can find detail on other sites on forecasting. But, I feel that the strategies still fit into these basic points: Good Systems, Good Bookkeeping and a Good CPA. All of these require communication and a team approach.
Good Systems: This is your foundation. You need to spend time putting systems in place. The business owner doesn’t need to do everything themselves. In fact, you shouldn’t. Spend the time to create systems on who will do what and how it will be done. For instance: What type of reporting do you want, where will it come from? Do you want to be involved with your bookkeeping, or do you just want it done and you receive reports? If you want it done for you, what is the systems for getting it done? What type of documents will you use and where will they be stored? To get started, set up your systems, get on a schedule, tweak them as needed, and communicate with your team. This is a continual work in progress that allows us to grow a company and adapt as needed.
Good Bookkeeping:
The information that is presented to you is only as good as what was fed into the accounting system. You can have great systems, but if you don’t put the information in correctly, what comes out won’t be correct either! Just because a person can enter information into the accounting system, doesn’t mean that they put it in the correct place. A good bookkeeper will work with you on making sure that information is recorded correctly in a format that you want to see and at the end of the year will present this to the CPA in a way that is meaningful to your tax return.
Good CPA:
A good CPA will work with you to make sure that you are staying on track each year. You want someone that is going to do more than your tax return. You want to have a CPA that will communicate with you in a way that you understand and provide ideas for how to spend and save money to help your business. It is good to include the CPA more than at year end when they are at their busiest and don’t have time to listen. Check in at least mid-year as well. Let them review the financials and make sure that you are staying on track.
I hope this gives you a starting point for your spring cleaning. If you have any questions, or need help setting up your systems, contact Kristina’s Abacus today!
Spring Cleaning with Your Personal Finances
Tax season can be a stressful time, especially for small businesses. If you’ve had trouble keeping your company’s finances in order in past years, it may be time to put some new systems into place that will make the burden to you—and your accountant—a little bit lighter. Try out these new organizational techniques now to make your upcoming tax year run much more smoothly:
1. Get physically organized
It’s important to organize your financial and tax documents in a neat and logical format. That way, when it’s time to file your taxes, you’ll be able to easily locate any document by its category and date. Your tax preparer might be able to recommend an organizer, which can be purchased at any office supply store. Or you may prefer to go electronic by scanning your documents and organizing them on your computer.
2. Use accounting software
There are many types of accounting software that work well for small businesses, such as QuickBooks and Sage 50, when it comes to tracking income and expenses. When it’s time to file your taxes, you will be able to print off a profit-and-loss statement to share with your accountant. If you don’t feel able to spend the money on accounting software right now, try using a simple Excel spreadsheet to track your income and expenses.
3. Keep business and personal accounts separated
By keeping your personal and business spending separated, you’ll be able to track your business income and expenses much more easily. Plus, you’ll make it easier to document your business activities in the event that the IRS has questions about your tax return or accounting.
4. Save your receipts
It’s important to hold onto any employment tax records for at least four years after the tax is due or becomes paid. You can simply keep all of your paper receipts in a storage container, or consider scanning them and storing them electronically.
5. Create a chart of accounts
A chart of accounts is a list of your company’s credit card and bank accounts, liabilities, assets, expense and income categories. Even if you’re not using accounting software, setting up a list of accounts will be helpful. To determine which categories to track, think about which ones you’ll report on your tax return.
6. Update your records daily or weekly
Updating your expenses and income frequently will help you gain a better idea of your company’s financial health at all times. This is important when it comes to making wise business decisions, and will also make it easier to produce all necessary data when tax time comes around.
We hope that this spring finds you financially healthy and prepared for a new tax year! Contact Kristina's Abacus if you have questions or would like to get ahead with your accounting and bookkeeping.