Small business owners dread end-of-year accounting. However, despite it being a hassle, it’s imperative for entrepreneurs and small businesses to implement an effective system for year-end accounting. Year-end accounting provides essential insight into the financial health of a business and highlights areas for improvement. When done correctly, it can help businesses take action to stay on track and boost their profits.
Year-end accounting can be complicated. However, with some simple steps, you can simplify the process. Outlined below are four end-of-year accounting tips for small businesses. If your business is struggling with tax debt, you should consider working with a skilled tax resolution lawyer to get back on track.
Implement an Accounting Software
Accounting software is essential for modern businesses. With the right accounting software, you can keep track of transactions and automate financial processes. Depending on the software you choose, you can implement the following accounting features:
● Inventory management
● Bank account reconciling
● Payment reminders
● Time tracking
Most accounting software is customizable, allowing business owners to implement systems specific to their business needs. For example, smaller businesses may choose fewer features than larger ones.
Send Regular Invoices to Your Customers
Business owners should regularly invoice their customers. With regular invoices, business owners can improve their cash flow and minimize the time they spend on year-end accounting.
Business owners should also send invoice reminders. Your customers are busy people, too. To best ensure your business has optimal cash flow, you should send out payment reminders. Not only will this help you get paid faster, but it will also reduce the number of unpaid invoices you’ll have to deal with during the year-end accounting process.
Run Financial Reports
Financial reports provide business owners with insight into the financial health of their companies. Not only do financial reports highlight how your business performed in a fiscal year, but they also can be used to set business goals and budgets. A couple of reports you should run every year include:
● Balance report: Your business’s assets, liabilities, and equity
● Expense report: All your business expenses
● Payroll report: The wages, taxes, and deductions of your employees
● Profit and loss report: The total revenue and costs of a business, highlighting whether your business made a profit or took a loss during a fiscal year
These are just a few of the financial reports you can choose to run during year-end accounting. Running financial reports will provide essential insight into the overall performance of your company.
Separate Your Personal and Business Expenses
While it may seem obvious to separate personal and business expenses, this is not the reality for many business owners. Business owners that use one bank account for personal and business expenses must separate these costs as part of their year-end accounting. If the IRS suspects that you are writing off your personal expenses as business expenses, they are likely to open an audit. If you’ve done a poor job of keeping your expenses separate, you’ll have a hard time making it through the audit without having to pay a fine.
Contact a Skilled Tax Resolution Lawyer
If you are a small business owner struggling with tax debt, you should contact a skilled tax resolution law firm. At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help small business owners and entrepreneurs conquer their tax debt. When you work with Attorney Becky Sebastian, you will experience compassionate attention that provides a sense of relief and peace of mind regarding your financial state.
To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.