For any business to succeed, seamless bookkeeping is a major requirement. However, this should not stress you as a business owner. When armed with the right bookkeeping tips and tricks, your business transactions will be properly recorded, organized, and classified. Though outsourcing professional accounting services is increasingly becoming the profitable option, it is prudent for you to understand some strategies of managing your financial records. We listed four these below that will help you with this task
1. Adopt cloud-based accounting software
Cloud-based bookkeeping software such as Xero provides an efficient, organized and a reliable way of handling even the most complex accounting transactions. Other benefits include:
- Reduction in upfront business costs – the cloud service provider handles such issues such as software maintenance and upgrades and servers failures thus reducing their cost on your business.
- It gives you a clear picture of your current financial status in real-time.
- You can access your accounting software at any time and from any device and location.
- It allows multiple users to access the accounting information making it easy for you and your team to collaborate.
2. Organize your financial transactions into generic account types
To get a clear picture of the cash flow in your business, you need to categorize your business’s financial transactions. For instance, you can group them into the following five main business account types:
- Owner’s Equity
You can then create subfolder accounts within these categories to cover the business necessities. For instance, under expenses, you can have a folder for salaries and wages, and under liabilities, you may have a folder for credit card balances or loans owed. However, to keep the records simple, only setup a few accounts. With fewer accounts, it is easy to maintain a simple transaction management process.
3. Understand tax forms required & submit timely to avoid interests & penalties
If you have employees in your business, you should ensure that they have the necessary tax forms and that there is enough money to pay for the tax applicable to their wages. You will also need to maintain their tax forms including
- W2 ( This Wage and Tax Statement form summarizes the wages an employee has received in a tax year and the deductions they have taken.)
- W3 ( This Wage and Tax Transmittal form summarizes all salaries and deductions you have paid as an employer in a tax year.)
- 940 ( The Annual Federal Unemployment Tax Return form reports the Social Security, Medicare taxes and the Federal Income deductions made on your employee’s paychecks)
- 1099-Misc ( If in the course of the tax year you paid at least $600 to an independent contractor, you should fill out this Miscellaneous Income form and provide it to the contractor)
4. Hire a professional to review your books
Even with a bookkeeper in your company, there are plenty of things that can still go wrong. It’s therefore advisable to hire professional bookkeepers or accountants who can review your books and unearth any errors to save you frustrations and huge expenses down the line. In case the consultants discover a bevy of mistakes, you can consider training your current bookkeeper or utilizing outsourced bookkeepers and accountants instead. We are here to help if you run into any problems and most likely be less expensive than a full time in-house bookkeeper. Give us a call to find out more.