As a small business owner, it’s unlikely that your dream of running your own business included hours of accounting. But tracking your expenses, invoices, payments and taxes is essential to keeping your business running smoothly and avoiding any trouble with the IRS. With a little organization and planning, you can make sure your accounting tasks don’t overwhelm you and your business. Here are a few tips.
It’s Not Personal
Do not mix business and personal finances. Open separate bank accounts for your business. Consider a checking account for transactions and a savings account to set aside some of your income for tax payments and unexpected expenses. Get a business credit card to easily track business expenses and build up a credit history for your business.
Tame Your Receipts
Saving your receipts from business transactions and expenses is important when tax time rolls around. While you could go old-school and throw all of your receipts in a shoebox, keeping your receipts organized will be much more beneficial. One effective system is to sort receipts into folders for each month of the year. Then, within each monthly folder, clip together receipts by income tax classification (i.e. food and entertainment, supplies, transportation, etc.).
Track Your Miles
While your Fitbit might be tracking your steps, as a business owner you should be tracking your driving mileage. It’s easy to overlook the mileage deduction, but that would be a mistake. If you use your personal vehicle for business, you can take the standard mileage deduction for 2017 of 53.5 cents per mile. There are no limits to the mileage deduction provided you have a compliant mileage log. So, if you drive to pick up supplies, to a client site, to the airport, or to a restaurant for a business lunch – write it down. Keep a log of where you go, the mileage, and the purpose of each trip.
Accounting software can help keep you organized. With programs such as QuickBooks, you can manage expenses, inventory, invoicing, taxes, payroll and more.
Ask for Help
If the task becomes too big, ask for help from a certified public accountant, who can make sure everything is in order, your taxes are filed properly, and you are getting the most out of your deductions.