All your accounting and business processes affect the health of your financial books. Here are some quick bases to cover to get your books in order. (Do it today, not later.)
Do you have clear boundaries between personal and business activity? We recommend separate accounts and, if you use them, separate credit cards. Nothing racks up your accounting bill like a bookkeeper spending time to comb through credit cards that are half personal expenses and half business expenses (not to mention the liability you risk when you mix business and personal in the same account).
Are you tracking expenses? We recommend you keep your expenses in QuickBooks Online, which syncs to your bank accounts and credit cards and can even “learns” what category a transaction might fall into based on your prior categorization. The QuickBooks Online app will let you upload pictures of receipts to your books and everything.
When people pay you, are you keeping a detailed log of how much cash you collected was sales tax? If not, you open yourself up to liability with the state. Sales tax penalties can be excruciatingly steep, so please take caution in this area of your business. Do you know what is taxable and not taxable of what you sell or perform? A quick call to your state comptroller can inform you of which items and services are required for sales tax.
This is an industry term that is to describe the process of double-checking the tracked expenses and income (and all bank activity) against the bank or credit card statements. This is not an intuitive step in the process but it’s an absolute necessity. At Sweeten CPA, like with many other firms, we will not file your tax returns on books that have not been reconciled, because the reconciliation is a kind of substantiation for the numbers that your books report.
If you need assistance implementing or maintaining these processes, talk to us about our bookkeeping services.