Posted on: 1 November 2017
When you run a small business, with very few employees, it can be easy to mix up your personal finances with your business finances. However, it is important to keep your business finances and your personal finances separate. Here are a few tips for getting your books in order before the end of the year:
#1 Set Up Separate Bank Accounts
If you are still mixing up your personal and business expenses and income, you need to set up separate bank accounts for your business and for your personal life. This is really important. You will have a much easier time figuring out your expenses and what you can deduct from your income at the end of the year if you have separate bank accounts. Setting up separate bank accounts will also make it easier for you to set aside a specific salary for yourself, instead of basing your disposable income on the cash flow of your personal business.
#2 Label Everything
You need to set up a label system for everything. After you make a purchase, you need to label all the categories that it falls under. Doing this at the end of every week will make it much easier for you to figure out your write-offs and credits at the end of the year. For example, if you purchased gas for your vehicle, put that under mileage and vehicle expenses. If you purchase ink for your printer, file that under office expenses. Filing all of your expenses at the end of each week will make it easier for you to qualify for as many possible write-offs and credits as possible.
Make sure that you are not just labeling your expenses, but you are also labeling your deposits. When you deposit a chunk of money into your bank, all you know is the total amount that you deposited. In your own books, write down where that money came from. For example, did the money come from revenue from sales or did you get the money from a loan? Keep track of where your money came from that you deposit into your accounts.
#3 Get Assistance
If you have not been keeping track of your expenses and income, hire an accountant to help you get your books together. You don't have to use an accountant for everything financially related to your business, but it can be a good idea to hire an accountant to get your books together for you. You can then hire them to come in once a quarter and review your books for you, make sure everything is in order, and help you get caught up if you get behind with keeping track of your small business's finances.
Contact a small business accounting firm for more information and assistance.Share