How Not To Dread Tax Season
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How Not To Dread Tax Season

How Not To Dread Tax Season

Welcome to tax season! For many entrepreneurs, it’s the most dreaded time of year. Why is this such a scary time for so many? If your books are in order and you have a good financial team working with you, there shouldn’t be any negative surprises. 

You can avoid some of the stress of tax season by avoiding some of the top bookkeeping mistakes made throughout the year.

  1. One of the most common mistakes, if not the most common among entrepreneurs, is mixing personal and business funds together. The more mixing of business and personal funds, the harder it is to separate when it’s time to report income or file taxes. Business owners should have separate business and personal accounts. Many in the accounting field even recommend using different financial institutions.
  2. Another mistake is improperly categorizing expenses. Accurately tracking income and expenses in the correct categories ensures proper measurement of profitability. Understanding profit and loss accounts versus balance sheet accounts can help mitigate your tax burden. Knowing the different tax treatments of each income and expense category can result in significant tax savings.
  3. Just as important is proper and systematic record keeping. Improper or poor receipt and record keeping is common for businesses. It is easy to lose receipts or forget about those small expenses that seem insignificant. Maintaining accurate records on a monthly basis and with a proper filing system can save you time and money on your income taxes. It can also provide the necessary documentation if you are ever audited.
  4. Being compliant with worker classification. It is vital to classify employees correctly. Businesses often have a combination of both employees and independent contractors. Make sure these are properly classified to avoid misfiling, penalties and overpayment of taxes.
  5. Once you are sure your transactions have been entered accurately, don’t forget to reconcile. Reconciliation helps to ensure that all income and expenses are accounted for. Make sure that your bank and credit card statements are properly reconciled every month. This will help to minimize errors and identify potential issues.

Finally stop wasting too much time. Many business owners try to do bookkeeping and accounting themselves. Although we all know that time is money, many business owners do not put enough VALUE on their time. 

How you value your time is extremely important to your business. A professional will know what to record and how to record it. This alone will not only save you time, but it will also free up more of your time so you can focus on taking your business to the next level and buy back some precious personal time.

 

At Your Service

129 Hibiscus Blvd. Unit L

Melbourne 32901

321-610-4595

sharon@aysbookkeeping.com

accounts@aysbookkeeping.com

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