Small business owners and self-employed individuals all know how daunting bookkeeping can be. Organizing your business finances often lingers in the background until the dreaded... tax time! Bring on the headaches, receipts, numbers, and trying to remember why you transferred out that money eleven months ago (let alone remember what you had for dinner last week).
This kind of stress is not good for your health, or your business' health! The number one stress reduction for small business owners can often be to outsource their bookkeeping, even if it's just a monthly review by a consultant. If you are fully committed to your books, however, here are some tips to remember that will keep the stress levels down.
Keep track of you 1099 employees from the start.
QuickBooks and Xero offer 1099 tracking for your independent contractors. Classifying these individuals as 1099 employees from the start will make tax time that much easier. Don't put yourself in the situation of backtracking through your checks in order to find out what you paid to whom. Both platforms have the ability to summarize the amount of compensation paid during the year for each contractor so that it is easy to report. (Be sure to enter social security numbers and contact information for contractors as well!)
Categorizing is your BFF when it comes to organizing your income and expenses. It's totally up to you with how specific you want to get with parent accounts and sub-accounts, but the primary goal is to have everything clearly sorted. Multiple income streams should absolutely be separated, along with whichever expense categories that are relevant to your industry.
Reconcile Every Single Month
One of the biggest mistakes I see small businesses committing is not reconciling their accounts each month, or at least each quarter. An even bigger mistake is to leave a discrepancy - there should not be even a $0.01 difference between what's in the bank and what's in the books. If there is, the DO NOT reconcile. It's best to find the source of the problem ASAP so it can be fixed.
Move to a Cloud-Based Bookkeeping System
If you haven't done this already, it's probably time. The ease and convenience of being able to access your books from any location remotely is a major stress reducer. No more being tied down to a desktop file - most platforms now offer on-the-go mobile apps as well. Everything nowadays seems to be moving to the cloud, and disregarding tech trends can be a huge business stressor and detriment. (This is also a good excuse to move your filing system to the cloud!)
Nobody likes being stressed. Especially not when money is involved. Save yourself the worry in 2017!