It’s only February, but both in-house accounting departments and CPAs are neck-deep in tax preparation. You might not even see these champions of business until the spring flowers are blooming! Unfortunately, many of these long hours can be avoided by more diligent record keeping and document tracking. While the number crunchers remain buried in paperwork and business continues on as normal, consider making a few simple alterations to your routine. Next year, they could save you both time and money by creating a clearer picture of your financial landscape.
1. Keep your business and personal accounts and expenses separate
If you own a small business, this is a crucial separation. We understand that it’s easy to get your personal and business receipts mixed together. After all, the lines are always clear. When you have regular business expenses throughout the year you might forget what expenses were personal and what were for business purposes. Instead of having to sort through them when the credit card statements or invoices come in, be diligent and keep your personal and business expenses apart as you go. This will not only work in your favor to maximize deductions, it will create a more defined picture should an audit ever happen.
2. Keep everything filed digitally and securely on the cloud
If you’ll remember in the theory of constraints, the goal is to identify something in your pipeline that keeps your business flowing smoothly and efficiently. One of the most time consuming and difficult processes accountants face is collecting, organizing, and recalling expenses, receipts and records. An easy way to streamline one of your essential activities is to file and store everything digitally and securely. Cloud storage is cheap and the cyber security for them continues to improve. Small businesses are among the easiest prey for hackers and thieves, often because information is insecurely stored throughout their business. Invest in data security by storing this information on the cloud. Not only will you be safer, you’ll be more organized and less cluttered.
3. Never pay in cash
While the age of cash is fading away, it’s still tempting to pay for business expenses, particularly small ones, with cash. Cash is hard to track and even harder to justify to your accountant or the IRS. Do yourself and your accounting department a favor: turn in check requests, use cards, and leave a digital trail. You’ll help your business run smoother and save yourself and your accountants a ton of hassle.