Bookkeeping is an essential part of any small business. It involves keeping accurate and up-to-date records of financial transactions, including income, expenses, and taxes. Bookkeeping can be time-consuming and complicated, especially if you do it alone.
In this blog, we will discuss some things you might forget while bookkeeping your small business on your own. Additionally, we always recommend speaking to a bookkeeper in Chandler, AZ, so you can always learn from the best.
- Separating personal and business expenses
One common mistake small business owners make is mixing personal and business expenses. This can make it challenging to keep track of your business expenses and cause problems during tax time. Make sure to separate your personal and business expenses by opening a separate bank account and credit card for your business.
- Keeping receipts
Keeping receipts for all your business expenses is essential for record-keeping and tax purposes. Keep all your receipts organized and safe, as they will be needed when you file your taxes. It’s also a good idea to make digital copies of your receipts to ensure they are not lost or damaged.
- Filing and paying taxes on time
Filing and paying your taxes on time is essential for any small business. Missing deadlines can result in penalties and fines, which can be costly for your business. Keep track of all your tax deadlines and set reminders to ensure you file and pay on time.
- Tracking all expenses
Tracking all your business expenses, not just the big ones, is important. Small expenses can add up over time and can have a significant impact on your bottom line. Make sure to keep track of all your expenses, including office supplies, travel expenses, and meals, to get an accurate picture of your business’s financial health.
- Reconciling bank statements
Reconciling your bank statements is an integral part of bookkeeping. It involves comparing your business’s financial records with bank statements to ensure they match. This can help you catch any errors or discrepancies and can help you identify any fraudulent activity.
- Tracking sales tax
If your business is required to collect sales tax, it is essential to track it properly. Keep accurate records of all your sales and the corresponding sales tax. You will need this information when it is time to file your sales tax return.
- Depreciation
Depreciation is the decrease in the value of an asset over time. It is vital to keep track of depreciation as it can impact your taxes. Make sure to accurately calculate the depreciation of your business assets, such as equipment and vehicles, and keep track of the depreciation schedule.
- Prepaid expenses
Prepaid expenses are paid in advance, such as insurance premiums. Keeping track of prepaid expenses is essential as they can impact your financial statements. Ensure to correctly record prepaid expenses and adjust them accordingly at the end of each accounting period.