It's Tax-Crunch Time: How to Keep Your Accounting in Check
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If you were to ask entrepreneurs what their favorite part about their job is, odds are, doing taxes is at or near the bottom of the list. Despite this, keeping good financials is paramount to run an effective business. And fortunately for entrepreneurs, accounting is becoming more streamlined and easier than ever.
The accounting profession has changed drastically in the last five years and cloud-based solutions such as Xero, SageOne and FreshBooks have emerged, allowing accounting professionals and their clients a real-time view into their financials. Additionally, the cloud has enabled many financial systems such as payroll and time tracking to be automated and integrated into accounting platforms, making number crunching not so daunting. These innovations combined have enabled accountants to do what they do best -- provide up-to-date financial counsel to their clients so they can focus more on growing their business.
While these developments are a benefit to small businesses and accountants, there are still preparatory tactics SMBs can employ to make the best use of these tools and benefit their bottom line.
Here are a few tips and best practices to help small business owners keep their visionary outlook, while enabling their accounting partners to serve them with the most accurate financial counsel.
Spread out tax payments. If you have trouble saving for your quarterly estimated tax payments, set aside funds each month instead. Treat it like any other monthly operating expense, that way it won’t seem like such a chunk when payment comes due.
Back to the future. It’s good practice to live in the “now,” but in business, as well as in life, you should be thinking about and planning for, the future. As a business owner if you’re not looking three to five years into the future, you are behind the competition.
It’s not personal, it’s business. Have a dedicated business checking account and business credit card. If your business checking is low on funds, it's easier to account for making a loan to your business than it is to account for business expenses paid from a personal account.
Monitor and measure. Look at your company's financial performance regularly and use backwards-looking financial statements to project forward revenue, expenses and cash flow. You can't manage what you don't measure. Having this knowledge will help you make better decisions.
The time is now! If you have dragged your feet about hiring an accountant or bookkeeper for your business get one today. Not just because it makes good financial sense to have an accountant lined up before the tax crunch, but also because accountants rosters fill up the closer it gets to tax time, making it hard to take on new clients. If they do take you on, chances are it will be at a much higher rate than if you'd started working with them earlier.