BOOKKEEPING MISTAKES TO AVOID!

Inaccurate or incomplete records could cost you big at tax time. Avoid these common mistakes to keep the books tight in your business.

• Mingling personal and business finances. Mixing your business and personal income and expenses makes for messy books, and it can have legal and tax consequences. Keeping a separate bank account for your business lets the IRS know your business is a legitimate separate entity.

• Not backing up your records. Is all your income and expense information in one place? What if that software crashes or you can’t access that account? Regularly back up your records with a simple download to make sure they’re there when you need them.

• Lumping all your expenses together. Tell us you track your expenses as separate line items?! Don’t just note a lump sum for each month or quarter or – eek – year because tax authorities treat each type of expense differently.

• Poor communication with stakeholders. Whether you’re working with employees or contractors, keep and share meticulous records of your business dealings with them. You don’t want someone knocking on your door at the end of January trying to figure out what you paid them last June.

• Forgetting about estimated taxes. Estimate quarterly taxes. They’re due every April 15, June 15, September 15, and January. 15. Forgetting to pay them and waiting until you file your tax return could mean a surprise bill at the end of the year but also a slew of fees for late payment.

• Incomplete recordkeeping. Track your expenses throughout the year with the proper paperwork — i.e. bring receipts. 

• Not consulting experts. Not every business owner needs to hire a bookkeeper. But, getting an expert involved can save a lot of headaches. They put in the time of tracking your finances, so you can focus on running your business. And they bring the expertise needed to keep all your financial ducks in a row and plan properly for taxes.

#bookkeeping #business #taxes