Keeping track of your business expenses can be a frustrating process if you’re a sole proprietor. You’re running a business and you don’t want to manage your accounting at the end of the day or don’t have time to. Here are two tips to help you get your bookkeeping in order and improve tracking and tax preparation.
1. Don’t Wait For Block Chain
Seriously. Don’t. While some people argue that block chain will make the double entry accounting system obsolete, and therefore make bookkeepers and accountants obsolete, the fact is, if you’re not taking advantage of bank feed integration that’s already available as part of many(all?) accounting platforms, you’ve already missed the boat.
With bank feed integration, once a transaction clears your bank, it can be automatically imported in your bank account feed within your accounting platform such as QuickBooks Online or Xero (My personal favorites). From here, it’s just a matter of coding the transactions or matching them accordingly. While it’s important to keep receipts (especially if a transaction needs to be split, ie, a purchase needs to be split between owner’s draw and repairs and maintenance accounts), it becomes a much more straight forward process to account for transactions in real time. This can save significant time and money when it comes to working with a bookkeeper and tax preparation. Even more impressive? QuickBooks Online has a built in AI that can “learn” and suggest categories for transactions based on previous similar transactions. Don’t wait for block chain, cuz the future is now.
2. Don’t Mix Business With Pleasure
Ask yourself, is what you’re about to use your business credit or debit card for really a business expense? We’ve all done it, ran in to the gas station and grabbed a $1 drink, or McDonald’s on the way home, drinks with friends, etc. The problem is, even if you charted everything correctly as an owner’s draw, you still have to take the time to record it, keep receipts, and so on. The saying that time is money is even more accurate when you’re a small business owner. Every minute that you spend recording personal expenses are minutes that you’re not spending on mission critical components of your business or spending time with family and friends. Even if you were to outsource your bookkeeping, it still requires money to record expenses that have nothing to do with your business. It’s a waste.
While sure, most small business owners can’t pay themselves a steady paycheck at first, it is a good idea to budget your personal expenses around how much money you can take as a draw from your business and then take a weekly or even monthly lump sum out of the business to cover those personal expenses. It saves a potentially significant amount of time and money to do just that.
Rather just outsource it? Message us and we can get you a quote! #Xero #Quickbooks #accounting #Bookkeeping