No business owner wants to be audited by the IRS for obvious reasons of course, besides it’s just too much of a hassle. All you have to do to avoid an audit is make sure that you don’t draw any undue attention from the Internal Revenue Service. Here are some simple guidelines recommended by CPAs and bookkeeping services for small business to follow that can help when filing your taxes, personal or for your small business.
- Enter All Details Correctly– Surprisingly this is the most common mistake that tax payers make- people get their name, address or social security number wrong. It is irresponsible and extremely annoying for all involved. Double check and get someone else to crosscheck the data for you if needed, but make sure all information is provided accurately.
- If You Are Married, File Taxes Separately With Care– If you are married, make sure you and your spouse don’t claim the same expenses and list the same dependents. The IRS is known to check both spousal returns to ensure there is no duplication.
- Avoid Overstating Charitable Donations– The IRS is suspicious of large charitable donations, so if you don’t want the IRS to audit you or your business, you should avoid mentioning large deductions. It is also common practice among tax payers to overstate the value of a donated vehicle, something that the IRS is also aware of. So if you donate a vehicle, mention only the market value or else you will draw unwanted attention from the IRS.
Filing taxes is not a task to be taken lightly. One sure way to ensure you get your taxes right is to hire a CPA or invest in a bookkeeping services for small business with professionals with a working understanding of tax laws. Having a professional on board will relieve you of the pressure.
The number of small business establishments in the United States has been growing steadily over the years. Not only are small businesses major contributors to the economy, they are also responsible for creating 64% of jobs in the US over the past 20 years. Let us take a look at why small businesses are gaining such popularity.
- Small businesses can adapt to changing market practices and conditions with ease. They are also capable of incorporating the latest technology and cloud based services, like bookkeeping services for small business and payroll, into their system quickly and effectively. All this can be attributed to the small size of the business which makes it versatile and nimble enough to adapt.
- Small businesses normally function out of small communities, which means they generate jobs for the people and pump money into the community. They create more opportunities in the area they are located. Bookkeeping services for small business firms have found that local communities are strengthened as people put money back into the community.
- Studies have found that small businesses produce more patents than bigger corporations. This is simply because employees in small establishments have lesser restrictions and hence have more scope to be creative and innovative, in fact, it is encouraged. Small business employees are capable of creative thinking, higher cognitive abilities and better problem solving skills. Bookkeeping services for small business firms also believe that limited resources that force you to find innovative solutions is also a contributing factor.
- Small businesses are positioned to grow and become multi- national companies, helping local communities and eventually the global market.
With the growing awareness of the importance of small businesses and how they help the economy, the government and numerous corporations are doing their part to help small businesses grow. Thanks to special programs, small businesses now have access to funds that they need to flourish and establish themselves. Small businesses are here to stay.
Face it, bookkeeping is the backbone of any business, big or small. Whatever business you may be in, you need money to keep things going and managing the money means bookkeeping. You can either do the bookkeeping yourself, hire a bookkeeper or outsource to bookkeeping services for small business. DIY bookkeeping is not advised unless you have the time, knowledge and are committed to keeping your books up-to-date no matter what. Whether you hire or outsource, bookkeeping can be tough on the pockets for small businesses, which is why we have a few tips on how to save money on bookkeeping for you.
- Be Organized– Being organized is important according to all companies that provide bookkeeping services for small business. Make it a habit to store all the relevant information and documents for each purchase and sale. This is useful when handing over papers to your bookkeeper as bookkeepers depend on the provided documents to update your books. If you provide sufficient information, it will save you and your bookkeeper time and money in the long run.
- Use Cloud Based Storage– Thanks to modern day technology, you will no longer have to depend on courier services and delivery boys to send around documents. Today it is as simple as clicking a picture of the document in question and uploading the image to your document management system, where your bookkeeper can retrieve it from. Now you can rest assured that your receipts reach on time and instantly, ensuring that your books are up-to-date and accurate at all times.
- Maintain Separate Bank Accounts for Business and Personal Use– If your bank account is used for personal and business purposes, your bookkeeper will have to spend more time figuring out the details of the business transactions. Instead of complicating things, maintain separate accounts and save yourself and your bookkeeper, hired or part of a bookkeeping services for small business firm, time and money.
Running your own small business is fulfilling and satisfying; it is after all your dream, but the thing about running a small business is that you will also have to face and handle numerous tough situations. Managing finances, payroll processing, accounting are all tough and time consuming tasks, which is why numerous businesses use bookkeeping services for small business. Budgeting and business forecasting is another such scenario. Budgeting and forecasting can be quite scary simply because you have a lot riding on it. Proper budgeting and forecasting can determine the course your business takes and how it fares every year. Unfortunately budgeting and forecasting are often misunderstood by even the best business owners, which is why we will discuss these two business functions here.
A budget is simply a financial plan for the future regarding the revenues and costs of the business. The budget determines how financial control is exercised in any organisation. A budget is a static document prepared prior to the beginning of the fiscal year. It determines the growth objectives of the business and maintains financial solvency.
On the other hand, forecasting is an ongoing assessment and analysis of actuals so that a company can understand where it stands with regard to its approved budget. This process plays an important role in preparing companies for unforeseen circumstances and market fluctuations. Forecasts need to be performed frequently, preferably monthly, to effectively predict scenarios. This can help you make adjustments to your operations accordingly.
Simply put, the budget tells you where your business should be, while the forecast tells you where your business really is. Budgeting and forecasting are indispensable financial tasks. They are especially important for small and mid size businesses because they are most likely to be affected by even minor fluctuations. So yes, budgeting and forecasting is going to be taking up a lot of your time, which is another reason most business owners find themselves without the time and energy to focus on bookkeeping and accounting and therefore enlist the help of bookkeeping services for small business. Do not take your budgeting and forecasting lightly; they play a big role in making or breaking a business.