Year-end accounting brings many small business owners out in a cold sweat, and the many challenges involved at this time of year, can result in accounting errors that can prove costly when tax time rears its ugly head. Whether your small business has a tiny team of task sharing individuals, or you run it singlehandedly, the IRS won’t make any exceptions, and it pays to get it right when it comes to your year end taxes.
By following the below 5 accounting tips, you could increase your chances of surviving year end accounting, and stay on the right side of the IRS:
- Make time to conduct a thorough review
A review of your finances can be beneficial at any time of the year, but it can be especially effective before filing your year end taxes. If you outsource your accounting needs, connect with them to ensure that they carry this out for you in good time, or meet with your accountant if they’re in-house or working within the vicinity.
- Be organized with your receipts and invoices
You’ll need these to accurately track your business expenses, and if you outsource your accounting, they will doubtless have the relevant software to help track your expenditures regularly, so that you’re not rushing around searching for receipts and panicking right at the last minute.
- Manage your cashflow
Managing your business and ensuring that it remains operational, is possible only with a steady, controlled cashflow, which helps to pay bills, among other things. Pay your operating expenses in a timely manner, and you should be able to avoid problems associated with your cash flow, or lack of. A good habit to get into, is to start a new tax year free from invoices carried over from the previous year, and this should form part of your year-end accounting check-up.
- Examine monthly recurring bills
When you’ve paid all your outstanding statements, look in closer detail at your recurring bills, and if some are the same amount each month or quarter, you can pay the next expected payment amount. For statements that vary each month, it makes sense to put some money aside to cover the estimated amount you’ll owe for the first quarter.
- Make sure you are payroll compliant
Payroll providers can help ensure that you’re meeting all federal compliance regulations, protect you from the risk of violation and submit your tax records for overtime, bonuses and/or commission checks.
Conducting a review of your financial processes is always going to be a good investment of your time and energy, and can be even more effective if you enlist the help of a tax professional. Making your year end accounting as simple and stress-free as possible is doubtless your goal, and thorough reviews coupled with help from an outsourced accounting agency, can help you achieve this.