As a small business owner, you may find certain aspects of your job glamorous. A speaking engagement, recognition by an industry heavyweight, a television appearance, etc. It’s a pretty safe bet that “bookkeeping” will never make that list. While it’s not sexy, a commitment to bookkeeping and a reputable bookkeeping service is an essential component of success. Here’s why.
Record Every Receipt
Yes, it’s a hassle to save your receipts. But business expenses add up quickly and can turn into a significant deduction come tax time. You probably already know to record the travel, meals, accommodations, and entertainment associated with your business. But don’t forget about the other expenses you incur that enable you to produce income. These may include banking fees, equipment repairs, membership dues, office supplies, and software. Review these with your accountant to determine which ones can be claimed as deductions on your return.
Pay on Time
Around your grand opening, you may remember when each bill is due. However, with each passing month, more pressing business matters will certainly fill your mental to-do list. Bookkeeping enables you to keep track of when each vendor needs to be paid. That way you’ll have on-time payments and your business credit will remain unblemished.
Manage Your Inventory
If you sell product, it’s imperative that you keep a tally of it during its time with you, from its initial purchase to when it’s sold. You need to record your inventory on a monthly basis, or more frequently. Why? Seeing the ebb and flow of sales will help you better meet customer demand in the future. If you have unsold inventory at the end of the year, your accountant can also guide you in valuing it for tax purposes.
Not Sure? Keep Track of it Anyway!
The beauty of being a bookkeeping star is that it captures every financial transaction of your business. Make sure your or your bookkeeper track money that is owed to you that you are unable to collect. If you offer discounts to your customers, note those, too. And if you suffer losses due to theft, record them. These items may be disconcerting on a balance sheet, but they could reduce your small business tax bill.
