BlogBookkeeping tips to help you build a solid financial foundation for your business. |
A while back I came across a startling statistic:
What in the world is cash flow?? It's the cash flowing in and out of your business [basically income and expenses].
So what are cash flow problems and how can we solve them? Overestimating future sales: estimating that you'll make $10k next month when you only made $1k this month and aren't actively growing your business. Solution: be realistic. Base your future numbers on those of the past and the work you’re willing to put in. Impulse buys: spending money before thinking it through and budgeting. Solution: ask yourself if this expense is necessary and if you can actually afford it at this stage of your business. New businesses will have different priorities than those who have been around for five years. Don’t compare your business purchases to others. Create a budget and stick to it no matter what everyone else is doing. Ignoring overdue invoices: pretending they don't exist because asking people to pay can be awkward! Solution: have clear deadlines on your invoices and policies if payments are late. For example, invoices that are unpaid after the due date are subject to a 5% late fee. I also recommend stopping work if someone’s invoice remains unpaid for 30 or more days. Keeping a low balance in your bank account: transferring all your money into personal accounts. Solution: set up a business savings account. It is helpful to save enough money to cover 2-3 months of business expenses. This will help you get through slower times in your business. And if you need to buy something like a new computer or camera you’ll be ready! Don’t let cash flow problems bring your business down.
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How many entrepreneurs are thinking of tax season now? Very few. But how many should be? Every single one! There are three things you can do today to make tax season a breeze: Save Your Receipts. Whether you save them in a file folder or in the cloud, it's up to you. The important thing is that all your business receipts are saved. Why? Because they are required by the IRS if you are audited. They want to see the receipt from Target showing you actually bought office supplies and not a new wardrobe. The burden to prove all those transactions in your bank account are business related will be on you. Taking the time to file receipts today will save you a lot of stress should you be audited later. Setup a Bookkeeping System. I highly recommend QuickBooks Online. It's a cloud-based accounting program. Before you run away because you're scared of numbers, let me tell you how QuickBooks Online has helped my clients!
Tax Plan. I highly recommend all my clients (and you too!) find a local CPA to work with. A good CPA will offer tax planning services. This is a meeting before the end of the year to help you take tax-saving actions such as identifying deductions, making charitable contributions, or buying new equipment. It is best to schedule this meeting sometime between mid-October through December. How prepared do you feel for tax season? Recently, QuickBooks Online rolled out an update to its receipts feature and you need to know about it! It will save you time and even money by eliminating the need to subscribe to other receipt storage systems. You have three options to upload receipts.
Using QuickBooks Online Desktop.
Using email.
Using the QuickBooks Online app on your phone.
Bonus Tips:
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