By BizFilings Business Owner’s Toolkit
Marketing plans and strategies, sales tactics, office policies—now is the time of year to revise nearly everything for the New Year. Except for bookkeeping, the oft-neglected business necessity that so many other functions ultimately depend upon.
The fact is relatively few small business owners have such sound bookkeeping systems that they shouldn’t revisit them. Improving bookkeeping methods is important not just for tax implications, but as a way to better record finances that, in turn, can be used for better reports.
Making your 2013 bookkeeping a planning priority won’t take too much time or effort. While these tips only scratch the surface—and assume, for the most part, that your bookkeeping is in relatively good order—they can help your business remain compliant and have more insight into your financial health.
1. Account for business transactions made on personal accounts. Personally purchasing a product or service intended for your business is still a business deduction. The problem is many small business owners never enter them into their bookkeeping system because the receipts are long gone by the time they record expenses. Start hanging onto all business purchase receipts and promptly recording these transactions into your books.
2. Take advantage of entertainment and dining exemptions. Despite Uncle Sam acknowledging that many business deals are conducted over dinner and a show, far too many entrepreneurs never claim legitimate dining and entertainment expenses. Or, they’ll claim every morsel they’ve ever ingested. Don’t be afraid to take a deduction that is rightfully yours, but be sure to create and maintain a dining and expenses log that includes the date, time, amount and purpose for the meals and/or entertainment. Writing a brief description about the business associates present and the type of business discussed will add even more credibility to the legitimacy of these claims.
3. Start your new business on the right foot. If 2013 is the year you plan to make the leap from employee to entrepreneur, bone up on accounting and bookkeeping basics. Once you have a firm grasp of the fundamentals, make a couple concrete decisions, including:
- Don’t put off opening a business checking account, or a business credit card or line of credit. You generally want to separate business and personal funds as much as possible for easier bookkeeping.
- Familiarize yourself with compliance and taxing agencies’ deadlines. If you have an inkling of expanding or changing your business, research filing and compliance deadlines now—they might have a large influence on your decision. For example, when Illinois-based businesses hire employees, they have a very limited window to report new hires to the Illinois Department of Employment Security. You’ll soon discover that government agencies don’t consider “I didn’t know the deadline” an excuse. They’ll answer back with, “Here are your penalties and interest.”
Every industry is different. And you may already address all of these bookkeeping concerns. Still, your business will benefit if you research specific industry bookkeeping techniques in order to strengthen your 2013 recordkeeping.
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