3 Ways You Can Simplify The Accounting Processes Of Your Small Business
Starting your own small business can be exciting, rewarding, and overwhelming all in one; however, it has its own set of challenges. If you are unfamiliar with the accounting processes of small businesses, you can easily become frustrated and overwhelmed with needing to keep track of all of your expenses, incidentals, and profits. Here a few tips to help you keep everything streamlined.
Open a Bank Account Solely for Your Business
You may think that it is easier to combine the finances of your business with the finances of your personal life, but it is recommended that you keep them separate from one another. So, open a bank account that is dedicated solely for business purposes and use it for all business-related earnings as well as expenses. In doing so, you will be able to keep track of how well (or not so well) your business is performing from one quarter to the next. Keep in mind that you may need to go to another bank rather than your current bank for your business account, and you may need to do some comparison shopping to ensure you find the best account for your needs.
Keep Track of All Earnings and Expenses
As a business owner, it is imperative that you keep close track of all of your expenses. Record keeping can seem a bit stressful, especially if you are new to it, but it does not have to be. Create a spreadsheet that will keep digital financial records. When a new business purchase is made, make sure to enter it into the spreadsheet. At the same time, when an invoice is processed or a payment is received, enter it into the spreadsheet. This will help in the establishment of spending habits, with tracking the performance of your business throughout the year, and in identifying areas that the budget can be improved.
Pay Your Taxes on a Quarterly Basis
Since you are self-employed, your portion of tax liability will not be paid for you. This means that you will be responsible for paying the full amount and need to withhold some of your income to cover the amount that you are responsible for. The IRS expects small business owners to pay quarterly tax payments, so it is important to plan accordingly. If you aren't sure how your estimated taxes should be filed, speak with a professional accountant in your area for assistance and make sure you remain on top of your tax liability.
If you feel you can't do it all on your own, talk to a company who provides small business bookkeeping to help.