Good Bookkeeping Practices to Make Tax Time Less Stressful
The best way to reduce tax-time stress is to have a trusted outside bookkeeping firm handle your financial record-keeping year-round. Bookkeeping companies like BookWerksTM will have all your reports ready to hand over to your accountant in plenty of time. Everything will be complete and accurate, and compliance with regulations in your field will be assured.
All year long, we will be on the lookout for ways you can maximize deductions, so when April comes, you may be in for a welcome surprise.
But whether you do bookkeeping in-house or outsource it to a professional firm, there are practices to implement to avoid stress around paying your business taxes.
Follow these Best Practices
As an informed consumer or eyes-wide-open employer, you should check periodically to make sure your bookkeeper is following these best practices:
Maintaining accurate records. Every transaction needs to be recorded immediately. Invoices, receipts, bank statements and credit card statements should be kept in a secure, easy-to-access place.
With an outside bookkeeper using cloud-based software, your accounts are synced with our records, so every transaction is automatically noted. Humans, who are prone to errors, are not involved.
We of course check (with expert human bookkeeping eyes) to make sure everything is in order before producing a report, but the tedious job of hand-recording all income and expenses is gone.
Using accounting software. Whether you prefer accounting services from Xero, QuickBooks or some other software program, you should let technology help you keep accurate financial records. We are well-versed in cloud-based software. This technology not only makes recording transactions simpler, it also generates reports and streamlines tax preparation.
Regularly reconciling accounts. This is part of the service at BookWerksTM. Our software automatically reconciles all your accounts monthly, and ensures every transaction is recorded in the appropriate category.
Keeping track of deductible expenses throughout the year. Business-related travel, supplies and equipment purchases may be tax-deductible. As your bookkeeping partner, we will make sure these expenses are duly noted.
Setting aside a portion of revenue for taxes all year long. A big part of the strain at tax time is figuring out if you have enough money to pay your taxes. Don’t wait until April to think about how much you will need. Based on the amount you paid over the past few years, set aside 1/12th of what you may need each month. We can help you determine this amount.
Filing on time. This is never a problem for BookWerksTM clients. If you do your bookkeeping in-house, mark tax deadlines on your calendar so you can be sure to file all necessary forms and payments on time. Penalties and interest charges are no fun.
Reviewing your finances quarterly. Monthly is even better! We review every report before it goes out, and encourage our clients to double-check for any errors or discrepancies. Checking your statements will also show you whether you are on track with your projections – or not – so you can make the necessary adjustments as soon as possible for the best possible outcome.
Asking questions. If anything seems off, speak up – the sooner the better! Your BookWerksTM bookkeeper is always available to answer questions and address any concerns. If you are not sure whether outside bookkeeping is for you, ask the provider you are considering for a free consultation.
This visit (in person if you are looking at Cincinnati bookkeeping companies and considering BookWerksTM), will give you a good idea of how the firm operates and what services they would provide at what cost. You will also find out if your personalities and approaches to money management are a good fit.