Without proper bookkeeping services, your small business is susceptible to both cash flow issues that can really cost you, but not as much as the legal issues that could arise. To help small business owners get a better grasp of good bookkeeping services, we’ve collected a few tips on what to do and not do.
1. Benefits of Bookkeeping
While flying by the seat of your financial pants is easier and you may be able to ballpark your numbers fairly well, sooner or later it will hurt you. One of the biggest ways it can hurt is during tax time, and the IRS does not want estimates. They want to the dollar amounts on everything from income to expenses to how much you spent on coffee (if you’re claiming it).
2. Keeping it Level
Ever bounce a personal check? I’m sure it was embarrassing, and your bank wasn’t too happy with you either. It may also have hurt your credit score. This is nothing compared to bouncing a business expense or spending what you don’t have. Unlike personal expenses, it can be harder for the wronged agency to collect on you. However, business holdings can be seized easier than personal, and it doesn’t take much to bring on the repo men. Which brings us to:
3. Avoiding the IRS Woes
Unlike private repo firms, banks, and the like, improper bookkeeping services that trigger an IRS audit or worse will more than eat up whatever expenses you saved by not keeping up with the books. Best case scenario: you ONLY pay a penalty and interest on the amounts the IRS says you owe.
5. But It’s Too Hard
Yes, some bookkeeping services are better left to the pro’s, but that’s not to say you can’t keep a tally of what is coming in and out of your business. This includes doing simple things like saving check stubs, bank statements, receipts, and more, which is especially useful should the worst happen.
6. There’s a Video for That
Still confused on how to get started? Check out this Bookkeeping Service Basics from Nerd Enterprises, Inc.
In twelve minutes, you’ll learn the basics of many bookkeeping services, which can also help you when trying to understand what your for hire bookkeeper is trying to tell you.
7. Use What You Have
Did you know that there are many free tools available from banks, credit cards, and other merchants you probably regularly purchase goods and services from? These end of the month and/or end of the year reports are a great way to see what you have spent in a period, what you have spent it on, and makes bookkeeping so much easier. Best of all, they will also satisfy the IRS.
8. Cash Counts
Although there are no free reports or other documentations automatically generated with each cash transaction, they must nonetheless be part of your bookkeeping services. If you are a cash based business, you probably have a cash register or two and a system tying them all in. This can be great for balancing the books, but even if you don’t have an automated system, there are still options. Cash transactions should always be accounted for per day, and have the accompanying receipts for each one. Even if cash is used infrequently, receipts are still required and an essential part of any bookkeeping service.
9. Employees
Even businesses with one employee –whether it be part or full time – must provide the information the employee needs to file and pay their taxes. Employers are accountable for providing and maintaining employee forms such as the tax withholding allowance, also known as the W-4, as well as the verifying the employees work eligibility, also known as the I-9. Any mistakes in these or other employment documents can be blamed on the employer.
Bookkeeping Services in Houston
And if you are in need of expert tax preparation services in Houston or the surrounding area, please contact me.
