Tax season is on the horizon, and the romanticism of running a small business has turned into the stress of preparing your tax files. We often think running a business is simply turning your passion into a pay cheque. But earning money for something you love also comes with various financial logistics. What if we told you there was a way to keep the love for your business alive this tax season? Keep reading as we list five bookkeeping tips that can help you have a stress-free tax season.
Tip #1: Keep your books updated
Make it a habit to regularly update your records instead of waiting until the end of the year. This will help you ensure that all of your records are accurate. A great way to do this is to use accounting software such as QuickBooks or Xero to help you track income, expenses and invoices.
Tip #2: Reconcile accounts monthly
Another way that you can guarantee accuracy is to regularly reconcile your accounts. Each month, match all of your bank, credit card and loan statements with your bookkeeping records. This will allow you to correct any discrepancies immediately and avoid confusion later.
Tip #3: Organize supporting documents
Keep all digital or physical copies of receipts, invoices and records for your deductible expenses. A good practice when organizing these files is to group them by category (ex. travel, utilities and payroll). This extra step will make your documents easier to review down the line.
Tip #4: Know your deductible expenses
One of the biggest mistakes that small business owners make during tax season is missing out on deductions. To avoid this, stay informed about industry-specific deductions and track all the business-related expenses that can reduce your tax liability. This includes home office expenses, travel costs, professional fees, equipment purchases, etc.
Tip #5: Work with a professional
Not all of us are a natural with numbers. Consulting the help of a bookkeeper can reduce your stress and ensure compliance with your industry's laws and regulations. If you’re unsure about deductions, classifications, or deadlines we would recommend seeking professional advice early.
Preparing for tax season may seem overwhelming for small businesses, but by using these tips you can make the process smoother and more efficient. Need help with tip #5? Our consultants are here to support you! Here at STEPS, we offer small business bookkeeping services and can help you get your financial documents organized and ready for the upcoming tax season. To learn more, visit our bookkeeping tab or reach out to us on our contact page.
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