Depending on your entity type, tax season might be just behind you. Or, if you filed for an extension or have a later tax deadline, you might be getting ready to file.
Wherever you are with your taxes, here are some best practices from Bench for you to consider to streamline your filing experience.
Set up designated business accounts for Tax Season
If you’re just starting your business, it might seem easier to use your personal credit card for start-up costs rather than set up new business accounts. However, it’s extremely important to separate your business expenses from your personal finances.
Why? For one, it makes keeping records easier—come tax time, you’ll know exactly what expenses are business-related and tax-deductible.
But more importantly, you’ll be covering yourself in the event of liability issues. Translation: if you’re a corporation and the line between personal and business expenses is blurry, you could be held personally liable for any business debts incurred.
Review your accounts receivable and payable
After tax season you should take stock of your accounts receivable and payable.
Go through any outstanding invoices and send friendly reminders to clients who owe you.
Similarly, go through your accounts payable and make sure you haven’t missed paying any vendors. Make it a goal to avoid late fees by paying bills on time (bonus: this will help with monitoring cash flow, too).
Find a bookkeeping solution that works for you
Evaluate your bookkeeping system and see if it’s working for you. Maybe you were doing your own bookkeeping last year but no longer have the time to continue doing so.
Or, you can’t afford your local bookkeeper and are looking for cost-effective options.
Speaking of taxes: it’s also a great time to make sure your historical bookkeeping is in order so you’re ready to file on time.
It can be tough to sort through a year’s worth of receipts and expenses and try to cobble together a financial statement.
An online bookkeeping service like Bench can get your books caught up and provide year-end financials that you or your CPA can use to file your taxes.
Bench will take over your monthly bookkeeping so you’re not caught in a lurch again.
Set one long-term business goal for the rest of 2021
Implementing small, quick changes is a great way to make new financial habits stick. But challenge yourself to think big and set one long-term goal for the remainder of the year.
Do you want to hit a certain sales target?
Reduce overall company spending or fully revamp your company’s brand?
Set your goal and check in on your progress each month. Have lower sales than expected one quarter? See where you can ramp up efforts to counter this.
Maybe you’re not charging enough for your product or services or you’re spending too much on advertising to be profitable.
These are just a few of the things you can do to set yourself up for a seamless quarterly or annual tax filing experience.
If you want expert help with monthly bookkeeping and tax filing support, check out the pros at Bench, and use my link to save 30% off your first 3 months!
Author: Bryce Warnes