1.SETUP SEPARATE BANK ACCOUNTS & PAYMENT GATEWAYS
Nothing can be messier than trying to cull through your business expenses, sales, and payouts from your personal bank accounts.
To make it easy on yourself, open up a new checking and savings account for your business.
This could be done at the same bank you are already loyal to, or you could take the separation a step further and open an account at an entirely different bank.
I know it can be a pain, but take the time to set up these accounts NOW – you & your accountant will thank you for it come tax time.
2. USE A DETAILED SPREADSHEET OR A BOOKKEEPING SOFTWARE.
You don’t have to be a bookkeeper to keep your own financial records. This can simply be done with a good spreadsheet.
If you prefer paper, you could even keep a written ledger with all of your information – just be sure to keep it very detailed and make sure you also have receipt copies of your purchases and expenses.
This is the easiest way to record your financial data when you aren’t financially savvy.
And if you don’t know your way around Microsoft excel then investing in a solid pre-made spreadsheet might be your best course of action.
Whatever path you decide, make sure that you are keeping detailed records of your income and expenses.
Having separate areas to record different streams of income is a must.
You should also get into the habit of writing notes with dates along with your numbers to outline exactly where the transaction came from and when.
Don’t try to go through the fiscal year without recording your financial data – you’ll end up hating yourself if you do!
3.UPDATE YOUR BOOKS WEEKLY
I cannot stress enough how vital this bookkeeping tip is!
If you aren’t very savvy when it comes to finances, then I must encourage you to update your spreadsheet every single week, preferably on the same day.
Make sure to include all of your sales, affiliate sales, taxes collected, taxes to set aside, and any other random financial data you have to record.
This not only helps you stay on track with your books, but also gives you an instant insight into your financial details, records, and goals you have set for the month & year.
It’s very eye-opening when you know how much money is coming and going in your business every step of the way.
Not only does this give you more control in your business, but it keeps you accountable and on-point to reach your financial goals along the way.
If you’re spending too much, you can assess how to cut back or how to improve your sales to level out the imbalance.
This will also help you come tax season.
With knowing how much money you are making, you have the power to set aside the appropriate amount to save for paying your taxes.
At the beginning of each week when you record your data, make sure to set aside enough money so you can pay your taxes.
Doing this, you won’t have any surprises when you visit your accountant.
4.HIRE A PRO TO HELP YOU
While you can certainly do the day-to-day record keeping for your business, I highly encourage you to entrust a professional for the final cut before sending over your information for auditing.
This provides you with four key benefits:
Ensures that your records are double-checked by a numbers professional.
Puts your mind at ease that you are running your business the way you should.
Helps you in the long run by getting all the latest tax breaks, credits, and write-offs appropriate for your business. Tax laws are always changing, so it can be a lot to keep up with if you don’t hire a professional to help you.
When your tax returns and notes are filed by a professional, there will be a lesser chance of being flagged for an audit.
Choose to entrust a professional in your business and you will realize it will be the best decision and investment yet.
Not only can a certified professional help you with filing your taxes, but you can also gather sound advice on business related questions and proper legal setup.
Skimping out on a professional could be more costly in the long run if you happen to get audited and your financial records are false or incomplete.
Keeping your books shouldn’t be complicated (and if it is, then it might be wise to take it a step further and hire out a full-time professional) and many financial pitfalls can be avoided when you follow these simple bookkeeping tips!