We get it - it’s tempting to put expense tracking on the back burner until tax time next year. But we also get that waiting until the last minute is not worth the emotional overwhelm and loss of sleep at the end of the year or the potential missing of tax deductions/misreported income.
Before busy season hits, here’s a plan to get ahead on your bookkeeping.
Simplify your system
If your bookkeeping process is overwhelming, take a look at your system. There could be a mental block with the software you are using. Or maybe sales tax has you completely paralyzed. Decide on the one place you will keep all of your finances and commit to that system.
Start at January 1 of this year
You will want to recreate the year from day 1. Go back to January 1 and make sure all of your income and expenses are reported. If using a software like Quickbooks, your transactions will automatically feed into the software. However, comparing this with your bank statement (aka reconciling) is the way to make sure everything is accurate.
Set a deadline and plan ahead for taxes
Make yourself a deadline. We recommend June 30 so that you can get a really good picture of the year so far. If you are working with a CPA, they will likely ask for year-to-date reports to be able to plan for taxes for the rest of the year. For example, if your income has significantly increased this year, you will owe more tax money than last year. Your CPA will be able to advise on any payments that should be made to reduce your tax liability for next year.
Hire a bookkeeper.
If you set a deadline (see #3) and it passed you by, it may be time to hire a bookkeeper. A good bookkeeper will not only keep you on track all year long, but they will make sure that you understand what your numbers are saying. They will help you be proactive and empowered to make decisions and move your business forward.
Need some help getting caught up? Find out more about our bookkeeping services here.