Why shouldn’t you pay for business-related expenses using cash? Well, opting for cash payments can make it difficult to keep track of all your expenses. Even if you receive a receipt from the store/vendor, there’s always the possibility that you’ll lose it between now and tax time. Choosing to make purchases using a credit or debit card, however, will ensure that a paper trail is left behind, regardless of whether or not you hold onto the receipt.
Whether it’s a loan, cash advance, investment, or just revenue from a sale, you should record all business-related deposits to avoid overpayments with your taxes.
Double-Check Your Numbers
Even if you think your finances were entered correctly the first time, it’s always a good idea to go back and check them again before filing your taxes. Something as seemingly harmless as an extra digit (or skipped digit) can cost you big bucks. By going over your numbers one last time, however, you can catch many of these mistakes so they don’t have a negative impact on your taxes.
Separate Business and Personal Expenses
Don’t make the mistake of using your personal credit card for business-related expenses (or vise-versa). The golden rule of small business accounting 101 is to keep your personal and business expenses separate from each other. When you begin to mix the two, you may have trouble identifying all of your expenses and from where they came.
Keep Inventory Records
Of course, it’s also recommended that small business owners keep records of their inventory. Including product names, numbers, quantities, etc. in your record book will help protect against theft and shrinkage.
Use Accounting Software
Think it’s easier to keep track of your expenses and finances using a pen and paper? Think again. Not only is this inefficient, but it increases the risk for errors and discrepancies. A smarter approach is to use the Quickbooks accounting software, which is capable of handling all of your accounting needs in a single and convenient interface.
Check out our previous blog post here to learn more about the different types of Quickbooks software and their respective features.
Have any other small business accounting tips that you would like to share with our readers? Let us know in the comments section below!