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9 Daily Accounting Tasks to Make Tax Season Easier

9 Daily Accounting Tasks to Make Tax Season Easier

No one enjoys tax season. For organizations, it’s a mad dash toward recollecting every tiny financial detail your company may have overlooked during the calendar year. For accountants, it’s a total blackout period in which it’s unlikely they’ll see their families, let alone leave the office. Even the IRS is stressed beyond measure, with some states having lost as much as 40% of their workforce in the last 5 years while returns have increased by 10 million in the same period. But despite the strain placed on those involved in organizations during tax time, it’s possible to reduce the stress on your bookkeepers and maintain order leading up to the filing deadline with just a few simple daily accounting tasks.

Get Organized

Plain and simple, the best way to keep your books tight and orderly when tax time comes is to maintain a sense of organization throughout the year. If you’re relentlessly committed to it and empower your team to turn in their receipts and invoices on time, your accountant will thank you when the end of the year comes around.

By creating a coherent, functional system at the outset, you’ll be able to:

– Reduce frantic, last-minute searches for lost invoices or bills

– Help speed up invoicing and tax prep

– Continuously deliver up-to-date financial reports, helping your company make informed decisions all year round

Start by bringing your revenue, inventory, and expenses information up to date in your system, then move to your bank accounts. You’ll want to set a time each week to review all recent data and keep everything current. In no time, you’ll see results and notice time saved.

Automate

Whether it’s invoicing or expense reporting, many basic accounting tasks can now be automated with just a little bit of prep work. Using QuickBooks allows you generate invoices automatically, giving you the option to email them or print them separately. Once you create each invoice, the information is piped into your existing accounting reports.

As far as expense reports go, it’s estimated that the average employee spends between 30-40 hours per year on expense reports, resulting in as much as a week’s worth of lost productivity. Using apps like Expensify (which ties in with QuickBooks), employees can save time and you’ll be able to cut down on lost time tracking down reports, receipts, and writing checks.

Make Your Systems Talk to Each Other

If you use a service like Square to process payments and handle credit card transactions, you can ensure the information you’re already gathering on your POS systems will be integrated into your bookkeeping services immediately rather than worrying about manually updating them 30 days later.

Offload Delinquent Accounts

Credit collection agencies exist for a reason. Delinquent accounts are a hassle to track down, let alone going through the process to collect and retrieve late payments.

Create a Viable Bookkeeping System

Bookkeeping is the act of day-to-day processing of transactions and reconciling bank statements. Accounting, on the other hand, looks at business progress and interprets the data by building financial statements, allowing business owners to make more informed financial decisions.

It’s important to establish a functional bookkeeping system that can change, grow, and adapt as your organization flourishes. This can be a monumental task, but if you make wise decisions now, you’ll avoid considerable headaches in the future.

There are a few directions you can take if you’re starting fresh:

  1. The DIY Route

Using software like Quickbooks, you can quickly and efficiently manage daily bookkeeping tasks in a neat and organized manner. Excel works too, so don’t hesitate to explore and find a system that works for you.

  1. Outsourcing

Many smaller companies use outsourcing bookkeeping services to save money and avoid paying a full-time employee who, honestly, may not have much to do during much of the year.

  1. Hire In-House

Once your business grows beyond a DIY solution or your outsourcing company, it’s time to hire someone to handle your books exclusively. Whether you hire a part-time employee or have grown to require a full-time staff member, it’s important to establish bookkeeping principles that will grow and flourish with your business.

Choose an Accounting Method

Whether they’re in Canada or the US, business owners need to determine whether they’ll use a cash method of accounting or the accrual method. The cash method displays revenue and expenses as soon as they’re actually received or paid out.

The accrual method dictates that each measurable revenue and expense are recognized and catalogued as soon as the transaction occurs. This requires tracking for both receivables and payables, but will give you an immediate picture of your financial situation – even if the money hasn’t cleared the bank yet.

If your revenues are under $5 million annually, you’re able to utilize the cash method of accounting; otherwise, you’re required to use the accrual method.

Set Up a Responsible Payroll Solution

Even if you’re a one-person show, it’s important to set guidelines and standards for payroll, HR, and raises. Because your organization will grow, you’ll likely need to hire on a part-time or freelance basis, necessitating a standardized payroll system. When it comes time to hire full-time employees, you’ll need a tight payroll schedule and ensure you’re withholding the correct amount of taxes each pay period. In the US, you’ll need to file a 1099 for each contractor at the end of the year, so be sure to keep documentation of each freelancer’s contact information when it comes time to file.

Determine Your Tax Obligation

Depending on the legal structure of your organizations, your tax obligations may be considerably different from other tax situations you may be familiar with. A self-employed individual, for instance, will owe a different amount than an LLC or partnership with the same revenue, but each will claim business income on your personal tax return. Larger organizations, such as corporations or non-profits, will be taxed as separate entities.

If you own a store and will owe more than $1,000 in taxes each year, you’ll need to pay estimated quarterly taxes on your income.

Iterate, Iterate, Iterate

You’re probably not going to be 100% efficient at managing your books right out of the gate, but as long as you have a standard method of reporting and logging your income as your business earns more and continues to grow, the better your chances of dodging significant tax hurdles at year’s end will be. As you continue to grow, remember to take time to monitor and assess your internal processes to ensure things aren’t falling through the cracks. The right bookkeeping solution means you can concentrate on growing your organization rather than constantly keeping one eye on the books, which could potentially save you money in the long run.

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