Tips Of Avoiding A Devious Tax Preparation

How to Choose a Tax Preparer for Truckers

Think – Who did your income taxes last year? Did they give you good service? Were you happy with the result? Did they even KNOW trucker taxes?

Over a year ago, the TruckingOffice team made a commitment to go beyond simply providing the very best bookkeeping and record keeping services available. We began a search for the very best in other important services that all professional drivers need, like factoring, insurance and tax services.

 

How to Choose the Right Tax Preparer for Your Finances

If you want your taxes done the right way, it’s a necessary process. These people are responsible for accurately filing your taxes, but they also have access to a lot of personal information. For that reason, trust is the number one factor in this process.

In this post, we’re going to help you choose the right tax professional to get the job done. There are various routes that you can go with this choice, whether it be a tax accountant, an attorney, or an enrolled agent.

Choosing the right one will have implications on your financial situation, which of course, has an impact on your quality of life and the quality of life for those in your household. Let’s find you the right tax professional.

Choosing the Right Tax Preparer

A lot of people hire a tax preparer instead of doing their taxes themselves. However, what most people don’t really think about is that they’re still responsible for any mistakes that occur, not the person that prepares the tax forms

TYPES OF TAX PREPARERS

There are four main types of tax preparers that you’ll be choosing from. They offer different rates and different levels of expertise, so you need to make yourself aware of what each professional is capable of

 

How to Choose An Income Tax Preparer

Seven years ago, Ruby walked into a commercial tax preparation service and walked out thinking she got a sweet deal. She saw advertisements for a $99 special that would cover the cost of preparing her tax forms and would also give her an advance on her return. The preparer estimated what her return would be and gave her more than 50 percent of it up front.

A couple weeks later she returned for the remainder and learned the deal was not so simple. Fees were hidden in her agreement. She ended up paying $340. And she eventually learned that the preparer made tax claims that shouldn’t have been made, which set the IRS on her and slapped her with $2,800 in penalties.

Be on the lookout for cash advances or short-term loans. Usually these deals come with interest rates ranging from 70 to 700 percent, according to the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). And they can come with electronic filing fees and application fees.

Make sure you give clear direction about whether or not you want the company to file your taxes. Never sign a document permitting it to do so if you are unsure. And always insist on receiving copies of all documents that you are required to sign or that identify the terms of a transaction, according to DATCP

Make sure the preparer has a PTIN (Preparer Tax Identification Number), which preparers must use on federal tax returns, said Lisa Schiller, a spokesperson for the Better Business Bureau of Wisconsin. The IRS’s website allows consumers to search for those numbers and see the preparer’s expertise.

 

How to file your taxes for free

Last year, Americans spent $11 billion dollars on tax-preparation services. Often, that’s money down the drain. There are several ways to file your taxes for free, whether electronically or even, in some cases, with the help of an expert. Here’s a rundown of your options and how to choose what’s best for you.

“Free File” software

If you earn less than $69,000 a year, you can use what’s known as “Free File” software. Made available through the IRS in tandem with commercial tax preparers like TurboTax, H&R Block and TaxSlayer

Here’s the catch: To ensure you won’t be charged, it’s important to access the software through the IRS’ website. Using the tools through other means, including searching online or using an account you set up for free in a previous year, could shift you into a paid product

Case in point: Last year, ProPublica revealed that Intuit, the maker of TurboTax, concealed its free file product from search engines and pushed low-income taxpayers into a paid version. The company now faces a lawsuit over the alleged scheme. Intuit denies the allegations

“Free File Fillable Forms”

If you earn more than $69,000 per year, you can still file your taxes without paying — you just can’t do it with software. Enter Free File Fillable Forms. This tool is the electronic equivalent of filling out a paper tax return, offering the most common tax forms as PDFs that you can submit electronically.

 

How to Choose a Tax Preparer

It is not uncommon for individuals to shy away from filing their own tax return, whether it is due to time constraints, fear, or a lack of knowledge. However, selecting the best preparer may be a bit challenging if you are unsure of which type best suits your unique situation.

Simple Returns

Individuals who are single with no dependents and possess minimal assets, if any, are the perfect candidates for storefront tax return preparation. However, if you have dependents and are entitled to deductions and credits frequently taken by taxpayers, such as the charitable contributions and medical expenses, it still may not be necessary to hire a Certified Public Accountant if the storefront preparer is knowledgable and experienced with tax situations similar to yours.

Tax Preparation

According to Forbes, will cost you approximately $200 per hour. Therefore, if you desire to soften the blow to your wallet, you should only enlist their services for complex tax situations.

Grey Areas

If you have scrutinized the tax code searching for the answer to a specific tax questions to no avail, it is in your best interest to hire a seasoned professional. Otherwise, cutting corners for the sake of cost-savings may come back to haunt you in the form of penalties resulting from audit findings.

Small Business Owners

As a small business owner, there is a ton of information to consider when preparing your tax return. Often, small oversights or mistakes, such as understated income, could end up costing you big if you are audited by the IRS. On your team also helps with tax planning throughout the year, so you will not be hit with a hefty tax bill when it is time to file your annual return.

Getting The Best Bookkeeping Rates

tips for brilliant bookkeeping

One interesting thing about being an entrepreneur is that you like to look ahead. You tend always to look for the new opportunity, for the next challenge, for tomorrow’s customers. Mostly, it’s a great characteristic to have. However, it does mean that few entrepreneurs relish breaking their stride to deal with a pile of paperwork.

In footballing parlance, entrepreneurs would be the attacking players; the strikers and wingers. But it’s no good being able to score goals if you also keep conceding them, which is why every good attacking team also needs a strong defence and a great goalie. And in the business world, your goalkeeper is your bookkeeper.

Keep your business and personal finances apart

If you’re a sole trader you are not legally obliged to have a separate business bank account – but you should have one nevertheless. Otherwise your books will soon be a nightmare to maintain, unless you record every penny of personal spending too.

Keep clear and separate records

Bookkeeping typically requires at least three ‘books’ (i.e. financial records): the cash book, sales invoices, and purchase invoices. Your cash book records everything passing in and out of the business’s bank account. This record of cash flow makes it an invaluable planning tool, as you can use it to underpin forecasts.

Control your credit

A full sales ledger is a beautiful thing, but if your customers haven’t paid yet, that beauty is only skin-deep. Set strict deadlines for your customers to pay their bills to you, and consider blacklisting repeat offenders if you think they are taking advantage. Chase every late payment, as each is essentially an interest-free loan. Without rigorous credit control, a small business can quickly develop a cash-flow crisis.

 

How to Help Your Clients Choose the Best Bookkeeper

To some, the roles seem synonymous. Even the dictionary contributes to the confusion, listing both as a person who records the accounts or transactions of a business. Though bookkeepers and accountants deal with the same financial information, they manage different aspects of it. Similar to the relationship of nurse and doctor or carpenter and architect, one handles the day-to-day while the other focuses on the big picture

A Great Bookkeeper has Skills

Unlike an accountant, a bookkeeper doesn’t need a state-issued license to work. Regardless, they should have some level of training or accreditation. Several national associations offer bookkeeping certification, including the National Association of Certified Public Bookkeepers, the American Institute of Professional Bookkeepers and the National Bookkeepers Association. Additionally, bookkeepers can receive training and certification through the QuickBooks ProAdvisor® Program.

A Great Bookkeeper is Experienced

Whether an independent contractor or operating through a firm, a great bookkeeper has experience – preferably in your client’s industry and with the same accounting software you use. When interviewing bookkeeping prospects, business owners should ask in-depth about experience to avoid incorrect assumptions. After asking multiple questions, it may become clear that someone with only two years of industry-specific experience is a better fit for your company than someone with 10 years of general bookkeeping experience

A Great Bookkeeper Wants to Build Their Business

With enough time and attention to detail, anyone can enter numbers into a ledger. But, that’s not what makes a great bookkeeper. A great bookkeeper understands your client’s business, spots red flags, and recognizes opportunities for improvement and growth. A great bookkeeper will ask questions to allocate things correctly; he or she will want to solve problems and implement processes that offer you and your business the most value. To find this trait in a potential employee, you have to know what you’re looking for

A Great Bookkeeper is Someone They Can Trust

More than qualifications and good references, the best bookkeeper is someone you can trust. They should be honest and transparent. They should be easy to reach via phone or email. Whether employed full time, their personality should mesh well with their company culture to ensure the best fit for both of you. Consider interviewing more than once to get a better idea of fit; include trusted employees in the meeting and change the interview location, if necessary

 

Tips for Hiring the Right Bookkeeper for Your Business

Experience – A good bookkeeper can be the glue that holds an organization together. It is critically important that he/she have experience in bookkeeping for an organization of similar size and complexity to yours. You should also look for someone who has worked in a firm at a similar point in their business lifecycle. For example, the bookkeeping needs of a high-growth start up could be radically different from that of a 30-year-old construction company. An experienced bookkeeper should be able to think ahead and anticipate needs before they arise. They should have experience with your industry and understand its unique bookkeeping requirements

Training and education – A good bookkeeper should be educated and trained and have a high degree of business acumen. While a master’s degree may not be appropriate, it is important that they understand basic business accounting and finance. A bookkeeper should have training and keep abreast of changes to accounting rules and procedures that directly affect their role.

Aptitude for technology – Unless your company is stuck in the 20th century, you should be using a software system to keep your company financials and manage your books. The right bookkeeper should be trained and have experience using your bookkeeping/accounting software. They should be adept at using other common tools such as Microsoft Excel and any industry-specific systems you have (e.g. estimating, billing systems.) They should be able to process online payments; and perform bank reconciliations

Attention to detail – By the nature of the role, a bookkeeper must have a keen attention to detail. They should have an ability to identify errors and balance accounts on the fly. They should be able to generate timely and accurate financial reports that are clear and concise

Credit and cash flow management experience – One of the most important skills a bookkeeper should possess is the ability to keep on top of cash flow and to anticipate cash flow requirements. Factors such as business seasonality, taxes, bonuses and recurring annual events must be considered when determining cash flow needs. The bookkeeper must be able to balance all of these requirements to maintain business stability

 

How to Hire a Bookkeeper Who Is Right for Your Firm

The COVID-19 pandemic has amplified the need for highly skilled bookkeepers who can help companies keep pace with the critical process of bookkeeping during this challenging period of business disruption. If bookkeeping is not handled effectively, receipts and paperwork will pile up. Bills will be paid late. Invoices won’t get submitted on time. And company expenses won’t get tracked

How to hire a bookkeeper

The first thing to decide is whether you need to hire a bookkeeper full time or engage someone on a temporary or temporary-to-hire basis. You could use a specialized staffing agency to find highly skilled candidates who would be the best fit for your company until you’re ready for a full-time hire

How can you identify the best candidates?

Bookkeeping practices vary between industries, so look for a track record relevant to your line of work. A bookkeeper who has worked only with fashion retailers, for instance, may not have the knowledge and experience to do an equally good job for an air-conditioning company. In other words, the relevance of a candidate’s experience is often more important than the duration of experience.

Do you need to look for certifications or memberships?

Bookkeepers in the United States are not legally required to obtain a license, but they can participate in several voluntary certification programs. When candidates are certified or licensed by the National Association of Certified Public Bookkeepers (NACPB) or the American Institute of Professional Bookkeepers (AIPB), it generally means their knowledge and skills are up to date. Ask them if they carry any certifications.

How will you know if a bookkeeper embraces accountability?

A good bookkeeper keeps your books clean and makes it easy for you to review and query the entries. A bad one leaves your books in shambles and runs away at the first sign of an independent audit. So, it’s no use hiring a bookkeeper you can’t trust. Do your due diligence and ask for reference checks from accountants who have worked with your bookkeeping candidates.

 

Qualities to Look for When Choosing Your Small Business Bookkeeper

Choosing a professional bookkeeping service is one of the easiest ways to help your small business grow! Every company, regardless of size, must accurately track and report the money flowing in and out of its accounts by way of sales, expenses, and salaries, but many entrepreneurs lack the knowledge and experience necessary to make this happen

Finding the Right Small Business Bookkeeper

The internet has made starting a small business easier than ever, so it’s hardly surprising that many of today’s busy entrepreneurs eventually find themselves burdened by make-shift bookkeeping systems that

Reliable

It goes without saying that a quality bookkeeping firm will have all the right credentials, but that doesn’t necessarily guarantee reliability. Look for companies with a long-standing presence that consistently demonstrates their integrity, and ask them to point to current clients who can provide honest opinions on the timeliness, efficiency, and confidentiality of their services. Don’t be afraid to ask a potential bookkeeper how they would handle a financial situation specific to your business.

Well-Informed

Every professional bookkeeper should understand the significance of your company’s income, expenses, assets, liabilities, and equity, but they should also be able to

Organized

Don’t assume that every bookkeeper is fundamentally organized and detail-oriented! Although it tends to go with the territory, experience plays a huge role in the efficient interpretation, reporting, and retrieval of financial data – especially when there are multiple clients involved. Ask about review policies and safety nets, and remember that the more streamlined your bookkeeping service’s operations are, the more positive an impact it will have on your company’s bottom line

Must Know To Do Tax Preparation

How to Find a Good CPA for Your Taxes

Ask about their specialization

CPAs can specialize in a range of accounting areas, including business, government and forensic accounting, as well as tax preparation. For preparing and filing your personal taxes, consider finding a CPA who specializes in individual income tax returns.

Verify their identification number

The IRS requires CPAs who prepare taxes to register with the IRS and have a Preparer Tax Identification Number (PTIN). To verify that a CPA is registered with a PTIN, simply search the IRS Return Preparer Office Directory.

Look up their license

CPAs are also licensed by the state, so before hiring one, you can search their records with your state’s board of accountancy. Most states offer CPA databases that allow you to search by name and find important information on a CPA’s license status, issue and expiration dates, as well as disciplinary actions and suspensions

Consider their experience

While all CPAs are credentialed prior to offering their services, CPAs with several years of experience will more likely have a deeper understanding of the tax code than a newly certified individual. For example, TurboTax Live CPAs have an average of 15 years of experience

Confirm their willingness to sign

Verify that your CPA will sign your tax return and represent you before the IRS for any tax matter related to your return. If not, consider finding a CPA who will.

 

How To Find The Perfect Tax Preparer This Tax Season

I don’t prepare my own taxes. That wasn’t always the case. When we first started the law firm, I did taxes for the business and our family. And when we bought our rental property, I took that on, too. And then we had a kid. And another kid. And a third. At some point, juggling it all was too much, and I realized that it was a better use of my time to pay someone else to do our books and prepare our taxes. But finding that person? That was the challenge.

I wasn’t alone in my search for a tax preparer: According to the Internal Revenue Service (IRS), for the year 2013 – that’s pre-Tax Cuts and Jobs Act (TCJA) – about 57% of taxpayers used a professional tax preparer (downloads as a pdf). And according to those same statistics, even as the Tax Code gets more complicated, the number of paid tax preparers is decreasing. With those odds, finding the right fit can take time and patience.

Our initial tax preparer was fine, but there were some gaps in communication. One of those gaps – while I was on maternity leave – resulted in an eventual audit. Our next tax preparer came highly recommended but ended up pleading to a count of felony tax fraud (I’m not kidding). My point: You might not get it right at first, and that’s okay.

Over the years, I’ve sorted out what works. We’ve had a relationship with our current tax preparer for a bit, and he gets me – from my control freak tendencies to my geeky tax humor. But I don’t regret my prior goofs because I learned from those mistakes. And here’s the secret: You’re the only one who can find the perfect tax preparer for you.

That said, I can offer a few tips. The key, as with hiring any professional, is to ask questions. Ideally, you’d establish a relationship – remember, you’re trusting this person with your personal and financial details. But whether you are looking for a long-term tax professional or just someone you meet with once a year to prepare your form 1040, there are some common truths

 

How Do I Find a Good Tax Professional?

After thinking about whether I should prepare my own taxes or not, I’ve decided to let a professional do the work for me. But now I have another question: How do I find one? No one I know uses an accountant. Should I just walk into one of those tax chains, look for a CPA nearby, or what do I need to consider before giving this person my financial information?

Different Kinds of Tax Professionals

Before you start your search, you might be wondering about all the different kinds of tax pros out there or who can do your taxes. Basically, anyone can call himself a tax preparer and file your return for you. There are two types of tax professionals, though, that are probably most appropriate for you and most people: certified public accountants and enrolled agents. Both types can represent you before the IRS in case you get audited.

Certified public accountants

CPAs are accountants who have passed qualifying state exams and met specific education and experience requirements for that title. Not all CPAs are experts on income taxes, though, so when looking for someone to prepare your return, you’ll want to ask about the CPA’s experience in handling individual taxes. A benefit of going with a CPA is these financial pros may be able to help you with other financial situations like estate planning or financial planning in addition to doing your taxes.

Enrolled agent

EA is a tax professional licensed by the IRS through a special enrollment exam or after working for the IRS for five years. EAs may specialize in specific tax areas, so be sure to ask what his or her area of expertise is. The benefit of using an enrolled agent is that these people live and breathe taxes (they’re required to take continuing education courses in taxes every three years), and, generally speaking, may charge less than CPAs

You have two other main choices for tax preparers—tax attorneys and tax preparation chains—but I don’t believe they make sense here. Tax attorneys are best for handling complex tax disputes and corporate matters, rather than preparing individual returns.

 

Finding a Good Tax Preparer

A good number of companies depend on professional tax preparers to file their tax returns. Many decision-makers in organizations prefer to outsource tax filing services to save on cost and time. A big challenge, however, lies in finding a dependable third-party company that can be entrusted with filing tax returns. There are a lot of factors to be considered before settling on a particular service provider.

They should have a CPA, law license or Enrolled Agent designation

When looking for a tax preparer, it is advisable to get someone who is a certified public accountant and has completed the IRS Annual Filing Season program.

Enquire for Preparer Tax Identification Number (PTIN)

Anyone who participates in preparing or assisting in tax preparation is required to have a PTIN by IRS. Therefore, before you settle on a provider for tax preparation, ensure they have a PTIN. They should also put it on your tax return as required by the IRS.

Cost comparison

Cost is important in nearly everything, isn’t it? It is important to consider the fee charged by your preferred tax preparer. A common way to determine the authenticity of the charged amount is to do a background search across several providers. Also, many tax preparers charge their fees on an hourly basis. Therefore, if you find one charge based on the size of your refund or claiming they can get you a bigger refund, you should treat these as red alerts.

Look for memberships

If you need to get a reliable tax preparer, you should consider the one registered with a professional organization. The National Association of Tax Professionals, the American Institute of Certified Public Accountants, or the National Association of Enrolled Agents are some of the reputable organizations for tax preparers. Members in these organizations are well-equipped with the latest trends and changes in tax returns. They are also known for high levels of professionalism and adherence to work ethics.

 

How to Find a Good Tax Accountant

FOR SOME TAXPAYERS, it’s a familiar tale. Somewhere during those first four months of every year, you do your taxes in a haphazard fashion, or you look for someone to prepare your taxes, and because you’ve waited until the last minute, you find someone in a hurry to do them. Every April, as you pay your preparer and Uncle Sam, you vow: Next year, I’m finding a good tax accountant.

How to look when selecting a tax accountant. Beyond trying to find someone who is competent, someone who you feel comfortable working with is a good start. And you’ll feel comfortable by asking a lot questions, says Abby Eisenkraft, CEO of Choice Tax Solutions in New York City. If you’re working in the U.S. but you aren’t an American citizen, you’ll want to inquire if they have experience working with expats, Eisenkraft says. Same goes with if you’re self-employed or have any unusual or special circumstances.

Where to look. That can be tough at first, if you want something beyond a tax preparation chain – and there’s nothing wrong with going with one, but obviously, you can find one pretty quickly in a phone book (yes, those still exist) or in a search engine. If you’re looking for something particular, you may want to try

What to look for when you work with a tax accountant. Unfortunately, kind of like taking a car for a test drive, you really won’t know if your tax accountant is a good fit until you’re working with him or her

Choose The Right Bookkeeping

Ways to Take the Pain out of Your Bookkeeping

Understand the purpose.

One thing that has helped a lot of our clients is understanding why they’re doing their books in the first place. To be able to file their taxes? To provide records to a bank for a loan? To give something to their annoying CPA to get them off their backs?

Sure, all of those things are real reasons. But they are far from the primary purpose that bookkeeping serves.

Review the reports.

This dovetails with the previous point, but at our firm, we are often amazed at how often a client tells us their books are completed, only for it to be clear they have not once looked at the reports. And we’re not talking about minor errors, but rather major items, such as “uncategorized expenses” of $200,000 on the profit and loss or a bank account that is supposedly $50,000 in the negative on the balance sheet. The client hates bookkeeping, so they did all of the data entry (as they felt required to do) but then were done with it.

Take small bites.

Admittedly, even with all of my encouragement, people are only going to “enjoy” their bookkeeping just so much. The tendency will still be to put it off for as long as possible. But beyond losing the valuable information from their reports during that period, that sort of procrastination will also drastically decrease the likelihood of the task ever getting done at all.

Utilize software.

Accounting software has come a long way in the past decade. Many services tie directly into bank and credit card accounts – downloading all of the transactions into the accounting program. Not only that, but they learn over time to which expense category each vendor is tied, which further automates the majority of the process.

Hire someone else.

If nothing else works, just hire someone to do it. We often tell our clients, “We don’t care who does it. You can do it, we can do it for you, or you can hire someone else to handle it. If doing it ourselves is simply not working, we may need to delegate the work to someone else. What matters is that it gets done.”

 

Ways to Make Bookkeeping Easier

Keep Business and Personal Separate

Maintaining your businesses bookkeeping will be challenging enough without mingling your personal income and expenses. You need to keep your business receipts and invoices for five years, and sorting through a big pile trying to remember if that expense four months ago was personal or business is a waste of your valuable time. Establishing separate files, budgeting systems and bank accounts for your business expenses and income makes tracking and reporting much easier.

Choose the Right Bookkeeping Method for You

If your business is small enough, an Excel spreadsheet might meet your accounting needs for a while. But when your business begins to grow, you’ll need a more powerful solution. Accounting software can be a huge help by organizing your invoices, cataloguing receipts and generating the reports you need to make solid financial decisions with the click of a mouse.

And Keep up With It!

Bookkeeping is like any chore: the longer you procrastinate, the longer it takes to catch up. Unfortunately, ignoring that pile of statements and invoices won’t make them go away! Eventually, you’ll be forced to waste a day that you could be spending with friends or family entering numbers and sending late invoice reminders. Bookkeeping doesn’t have to be a daily chore, but don’t wait until the end of each quarter to pull all that data together.

Pick the Right Time

If you’re most productive and creative first thing in the morning, don’t use that time on your bookkeeping tasks. Determine a time of day or week when you can focus, but don’t need optimal brain function to work. That’s when you should catch up on your bookkeeping. Set this as an appointment in your schedule, and keep to it! If you’re finding this difficult, and that you are behind no matter what, it may be time to add a professional bookkeeper to your support team!

Make Sure You Know the Law

For someone starting out in business, the legal aspects of finances can be the most nerve-wracking. The ATO provides tons of resources, but sorting through the guides can be time-consuming and mind-numbing! A few basic rules you must follow are registering for an ABN, registering for GST if your turnover is more than $75,000, and lodging your BAS on time!

 

Bookkeeping 101: A Beginning Tutorial

Accountant vs. Controller

Where the bookkeeper records and classifies the financial transactions of the company, the accountant takes the next steps and analyzes, reviews, reports, and interprets financial information for the company.

The controller is actually a company’s chief accounting officer. He/she is responsible for setting up and maintaining the company’s accounting system. The controller is responsible for financial and managerial accounting; in other words, responding to the firm’s accounting data in an appropriate and responsible manner. A controller is usually hired as a business gets larger.

Bookkeeping With and Without a Computer Program

This tutorial on bookkeeping teaches you basic bookkeeping without using a computer program. Why do you need to know that since there are so many computer programs out there you can use? Have you ever heard the saying, “Garbage in, garbage out?” You have to understand the basic bookkeeping behind what you enter into the computer program in order to enter in the correct information. A later tutorial will deal with using a computer program to handle bookkeeping for your business organization.

 

How to Bookkeep

Decide what type of system to use. The most important part of bookkeeping is being consistent. You don’t want to lose receipts, forget to record transactions, or record the same transaction twice, as this could cause a misrepresentation of your business’s financial health. The simplest way to avoid these errors in by establishing a consistent system for both recording transactions in journals and entering them into the ledger.

Use accounting software. The simplest way to ensure that your transactions are recorded reliably is to invest in an accounting program like QuickBooks, FreshBooks, or Expensify. These will take a lot of the guesswork out of recording different types of transactions and present your information clearly. Many of these programs are available for free or on as a free trial for a limited time.

Use a spreadsheet. For a more manual system, try setting up a spreadsheet to record transactions. This can be done either manually, with physical transaction journals, or on the computer with a spreadsheet program. The formatting of these journals is up to you, but it should include the following, at minimum.

Be consistent. For any system you use, be sure to enter your transaction data on a regular basis and in the same way each time. This is to be sure that transactions are not overlooked and that you have the most up to date picture of your business’s financial health. In addition, it is a good idea to establish a regular schedule for transferring information from the journals to the ledger, perhaps on a weekly or monthly basis.

 

Small Business Bookkeeping Tips

Keep Business And Personal Banking Separate

All new business owners must make it a priority to open a new bank account for their business, preferably an account with online access, to keep business funds separate from personal funds.

Processing transactions for your personal expenses within the bookkeeping of your business is a waste of precious time.

It’s even worse if you are outsourcing and paying a bookkeeper to process your accounts with these personal expenses mixed in…

Recognize Business Vs Personal Expenses

Drawings (Personal Expenses)

A sole trader or proprietor will most likely withdraw funds from the business account for personal use (drawings). This can be done in place of paying themselves a salary (but check with your Accountant first).

A good practice is to transfer one amount on a regular basis, such as once a week, from the business account into the personal account. The personal account is then used to buy the groceries, books, toys etc.

Choose The Right Bookkeeping Software

The type of bookkeeping software you get will depend on what you need out of it.

Many software providers offer different levels, here are some examples:-

Cashbook

Ledger and Cashbook

Ledger, Cashbook and Inventory

Ledger, Cashbook, Inventory and Foreign Currency Transactions

Ledger, Cashbook, Inventory, Foreign Currency Transactions and Point of Sale

Organize Your Business Documentation

Keeping the documentation for all business transactions is a high priority. They are called accounting source documents. Keeping them enables:-

Easy tracking for any future queries that might pop up, and

Proof (to an auditor or tax man) of what occurred.

Keep Track Of Cash Payments

Any cash received should be paid into the business bank account or petty cash before spending it.

It can be tempting to take the cash right away to purchase supplies but this might cause a mess in the bookkeeping system.

For example, the bookkeeper/owner might.