Steps to take now to get a jump on your taxes.
Taxes are complicated, but organizing your tax documents and filing system shouldn’t be. Use these tips to get organized and get a jump on your taxes.
Keep separate bank accounts. The first step in organizing a company’s finances is to open dedicated bank accounts and credit card accounts to only capture business activity.
Categorize expenses. Categorize expenses in a way that makes sense for the business. Most expenses fall into general business categories found on templated charts on accounts, such as travel, entertainment, office supplies, and utilities. Ensuring transactions are categorized correctly is essential for accurate reporting.
Keep meticulous records. The importance of meticulous record keeping cannot be overstated. The best hack to create a thorough “paper” trail is to document every event as it occurs and never rely solely on memory. For example, take/type notes during conversations with customers, bankers, and suppliers, and include “memo” entries on invoices and checks.
Save receipts. It’s important to maintain good-quality supporting documentation, such as receipts, for expenses. Receipts must be easy to read and contain all the information needed to justify expenses, such as amounts paid, descriptions, and suppliers. Digitizing receipts is another hack that makes this process more organized and less cumbersome.
Keep profit & loss (P&L) statements organized. A P&L, also known as an income statement, is a useful snapshot of revenue, expenses, and earnings. It can help inform better decisions if kept current and accurate. A helpful hack is to compare the P&L statements from various fiscal periods to uncover potential anomalies, omissions, and trends.
Giving attention to these important activities will help your business to operate in a more streamlined manner and can help you increase your company’s profitability.
If you need assistance with these tasks, then an outsourced accounting firm may be the perfect solution for you. I offer professional, high-quality accounting services to get your business up on your taxes at reasonable rates. If you’d like to learn more, contact me today.
