Accurate financial management is essential for small business success because it facilitates compliance and allows for growth tracking. The tax experts at JCox CPAs & Advisors, P.C. have put together this concise guide with crucial bookkeeping advice for small business owners.
Keep personal and business finances apart.
Establishing a specific bank account and credit card for business use only is one of the first steps in preparing your company for financial clarity. By keeping personal and business transactions apart, this makes filing taxes easier and reduces issues in the case of an IRS audit. This division is essential for accurate financial reporting for all business entities other than sole proprietorships.
Use Automation to Simplify Accounts Payable
Managing bills and invoices can be made easier with a trustworthy tool like Bill.com. With its integration with QuickBooks, it streamlines your accounts payable and receivable procedures and provides safe payment methods such as international wire transfers, credit cards, checks, and ACH transfers. Automating these processes with digital tools reduces errors, saves time, and aids in maintaining vendor payment organization.
Make Expense Tracking Digital
Keeping track of expenses for several employees can be challenging, particularly when dealing with physical receipts that are prone to being misplaced or destroyed. You can assign specific funds to team members and maintain digital records with an expense tracking tool like Divvy. Workers can upload receipt photos straight into the app, which simplifies record-keeping and improves budgetary control.
Use Financial Information to Make Strategic Choices
Your financial records are vital tools for strategic planning, not just for tax purposes. Making informed business decisions can be facilitated by routinely examining your profit and loss statements and comprehending important financial ratios, such as debt-to-equity and return on assets. Monthly or yearly analysis of these records can help identify areas for growth and cost reduction.
Get Ready for 1099 Forms in Advance
You must provide a 1099 form for independent contractors who are paid more than $600 in a single year if you work with them. Requesting a W-9 form from each contractor at the start of your working relationship will streamline this process. The last-minute rush during tax season is avoided and 1099 preparation is made simpler when their tax information is on file.
