Every January we hear the phrase, “New Year, New You.” You may have resolved to get healthier or more organized in the New Year, but have you devoted the same attention to your business? Try a business resolution in 2018 and resolve to improve your bookkeeping. A few simple bookkeeping switches can protect your assets, streamline your workflows, and save your business time and money.
Your business’s bookkeeping is likely a struggle because it’s time-consuming – and it takes you away from doing the business that keeps those books in the black. Use technology to track your expenses and automate tasks you’re currently doing manually. Cloud computing and accounting programs allow you to add information from anywhere, and your accountant can access it at will. With certain apps and software, there’s no dead time. When you’re standing in line buying office supplies or waiting on hold with a vendor, you can complete a few simple tasks, so they don’t pile up.
Automate Manual Tasks and Backups
Many of the tasks that take up your time can be automated. Adopt invoicing automation software that sends billing to suppliers and allows you to sort cash flow views based on both income and expenses.
If you regularly exchange documents that need to be signed, sign up for a cloud-based document exchange service. As soon as you prepare documents, they’ll instantly synchronize with the cloud, so customers can view, sign digitally and return them to be automatically filed when you need them.
Automate compliance issues and use a capture system that allows you to scan documents and have software convert it into digital transcripts you can send directly to accounting.
Develop a Receipt Management System
You keep receipts for everything you claim as a deduction, but organizing them can be a challenge. If at tax time you find yourself digging through crumpled papers stuffed in your vehicle console and rummaging through mountains of receipts shoved in a drawer, it’s time to make a change.
If you’re audited, you’ll need documentation for every deduction. One of the best ways to tame the unruly pile of paper is to go digital. Apps like ReceiptBank or Shoeboxed allow you to snap a photo of each receipt and store an electronic copy online. If you have a collection of receipts for this year, Shoeboxed even allows you to mail them in, and they’ll do the scanning for you.
Both services can be integrated with most current accounting software to transfer receipts automatically. You take one photo, the app does the rest.
No matter what methods you choose for entering information, if it’s incorrect, it doesn’t help you manage expenses or plan for the future. Learn how to reconcile accounts and make a habit of doing it every month. Reconciliation involves comparing your bookkeeping records to the funds actually credited and debited to accounts to make sure each charge is correct.
Keep a Business Journal
Your business likely incurs expenses every day for travel, business clothing, eating out, political donations and cell phone charges. If the IRS requests verification for an expense a year later, will you remember what you did last week?
A business journal helps you keep track of the minutia of daily business life. Start making a quick note of every time you travel, every business meeting, and every meal you eat on the road. Later, you may not remember having coffee with that client, but, if you need to remember why you called it a business expense, you can flip back in your journal to that date and find out exactly what you were doing. Write handwritten notes on a calendar you keep with you, or download an app for smartphone access on the go.
Pay Your Bills
Go over accounts payable at the beginning of the year and develop a plan for paying them all off by the end. Costs count as a tax deduction to reduce your overall bill. If you’re a sole proprietorship or LLC, they also reduce your annual income, so they count as a personal deduction.
If growing your business thrills you and bookkeeping takes time away from what you do best, it makes sense to hire someone else to take care of it. At Diversified Management Services, Inc., we provide bookkeeping, accounting and payroll for businesses of every size. Turn over the hassle and free your time to focus on business growth when you contact us for a free consultation today.