If you run your own business, keeping your books is vital to keeping your business running and afloat. Here are three bad bookkeeping habits that you should work hard to avoid this year.
#1 Doing Your Books Yourself
If you do not have financial training on how to do accounting, there is a good chance that you are making a lot of small mistakes with your books. If you want to avoid making small and big mistakes with your books, it can be worth it to hire a professional bookkeeper or accountant to work on your books for you. They can make sure that you are following all financial rules and they can create important financial reports for you throughout the year that you can use to guide your business. Additionally, paying someone to do your books can help streamline the process, allowing you to spend more time on the area of your business that your skills are best suited for.
#2 Keeping Poor Books
Another way you can cripple your business is by keeping poor books. If you don't stay on top of your bookkeeping, you can easily harm your business. If you figure out the earning for your business and overestimate them, you could be spending money that you don't have. If you don't keep track of the invoices that you send out, you could be owed a bunch of money that you are not even aware of. Keeping poor books can easily and quickly run your business into ruins.
#3 Failing To Meet Tax Deadlines
Finally, the biggest mistake that many small business owners make is failing to meet IRS deadlines. The last thing you want to go through as a small business owner is a tax audit, but that is exactly what you are setting yourself up for if you don't meet important IRS tax deadlines.
You can ensure that you meet the major tax deadline – filing your taxes – by staying on top of your books, closing them out at the start of the year, and starting on your taxes in Jan and filing them well before the April deadline.
You also need to make sure that you have a solid accountant that you can work with to ensure that you are making the right quarterly tax payments on time and that you are paying the right amount of employee taxes.
By avoiding the three common small business bookkeeping habits next year, you should be able to help keep your small business in clean and clear financial waters. For more tips, contact a company like HBE Becker Meyer Love LLP.