If you’re a small business owner (or someone who is self-employed) and are wanting to improve your bookkeeping habits so that you don’t feel so anxious every tax season, this post is for you. Here are my top three recommendations based on conversations I’ve had this year with entrepreneurs:
KEEP A VIRTUAL LOGBOOK ON YOU AT ALL TIMES
Take advantage of that one thing you carry around everywhere you go – your phone! Each time you make a payment on an expense, take a picture of your receipt right away and store it in a bookkeeping app or at the very least, in a folder somewhere that you and your bookkeeper have easy access to. After a short while, it will become second nature for you and you’ll feel relieved knowing that you no longer have to worry about fading ink on paper receipts. Keep them stored safely online for the next six years, in case of an audit.
LEVERAGE YOUR CALENDAR TO KEEP EXPENSES UP TO DATE
A calendar is a great way to create a business journal for yourself and your business. By utilizing your calendar this way, you are essentially keeping an online record of your business-related activities. This will also come in handy if you’re ever looking back at your records or being audited.
SAY NO TO CASH
Cash is the worst method of payment. Your transaction is essentially nonexistent when making a cash purchase because there is no way to reconcile your purchase. Cash is bookkeeping’s worst nightmare. So try your very best to stay away from using cash for business expenses. My recommendation for business expenses is to use a credit card and keep it separate from any personal expenses. That way, you’ll be able to use your credit card statements as records.
Dayna Holland, CPA, CA (she/her)
CEO of Dayna Holland Ltd.
Are you a new business owner in need of tax tips? Click here to read a full list of my bookkeeping tips for business owners and freelancers.
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