How can I keep my accounting and tax records organized?

Keeping records is an important part of running a successful business. Complete and organized records will help you monitor your business progress, identify sources of income, keep track of expenses, prepare financial statements, and prepare your business tax returns. You can use any recordkeeping system you choose, as long as it clearly shows your income and expenses. A good recordkeeping system should include a summary of all business transactions.

What kinds of records do I need to keep?

You should maintain organized records of your business income and expenses, including invoices to customers, sales receipts, receipts for expenses, paid bills, bank and credit card statements. You may also need to maintain payroll records, tax documents and financial reports.

How often should I reconcile my bank and credit card accounts?

We recommend that you reconcile your bank and credit card accounts on a monthly basis. This helps to ensure that your records are complete and accurate. In addition, reconciling your accounts can help you identify errors in your records quickly.

How do I figure out my business’s cash flow?

Cash flow is calculated by subtracting business expenses from revenues. Cash flow can be projected using accounts receivable and accounts payable if your business is using these functions. Knowing your business’s cash flow can help you make good decisions about purchases, investments, hiring, etc.

Why is bookkeeping important for my small business?

Bookkeeping is the process of recording and organizing financial transactions for a business. It is crucial for businesses, as it helps owners monitor cash flow, make informed financial decisions, comply with tax regulations, track profitability, and demonstrate the financial health of your business to stakeholders.

How often should I review my business’s financial statements?

You should be reviewing your financial reports on a monthly or quarterly basis, depending on your level of business activity. Reviewing your financial statements will help you to identify trends and make informed business decisions.

What is the difference between bookkeeping (bookkeepers) and accounting (CPAs)?

Bookkeeping is the process of recording financial transactions. Accounting involves interpreting and analyzing financial data to make strategic decisions. In addition, many CPAs can provide guidance on business deductions and taxes that are beyond the scope of bookkeeping services.