5 Ways to Simplify Accounting for Your Home Based Business
If you asked a room full of successful CEOs what they feel is an important character trait of any business owner to have, what all of them would probably tell you is that it’s extremely beneficial to be organized. Not only will it help you with the day-to-day demands of running your company, but it can also keep your books straight so that your expenses can be kept in proper order too.
That’s why we felt it was important to share with you a few tips on how to simplify your accounting as it directly relates to your home-based business. We feel confident that if you apply these five suggestions, you can rest easy when it comes to handling your company’s money.
Have separate (bank) accounts. Before you do anything, it is absolutely imperative that you open up a business account. This is the best way to insure that you don’t mix your personal expenses with your business ones. You’ll be so glad that you did this, especially when tax time rolls around.
Pay your taxes on a quarterly basis. Once you get to a certain level of generated income, the IRS is going to expect you to pay your taxes each quarter. But if you’re just starting out, it’s smart to get into the habit of this from the very beginning. Not keeping up with your taxes is a surefire way to end up in a situation where you may owe so much money (including interest fees) that it could put your company in serious jeopardy.
Send out prompt invoices (pay your bills promptly too). If there is another thing that many CEOs will probably advise it’s that you make sure to not procrastinate when it comes to sending out invoices and also paying your bills. When it comes to giving out invoices, it can help you to calculate how much money you have vs. how much is owed. When it comes to paying bills, by being timely, that will send out the message to your creditors that you are responsible and good credit is an absolute necessity for business owners.
Stash away some petty cash. Just about any financial advisor will tell you that it’s important to have some petty cash either in your office or set aside in your bank account. The reason why is because sometimes unexpected things come up and it would be best if you didn’t tap into your profits in order to take care of them. For the same reason that you need an emergency fund for your house, that’s why you need some petty cash for your business.
Hire an accountant. To some, this might seem like a really obvious suggestion, but you’d be amazed by how many people tend to feel like it’s a waste of money to have an accountant when there is so much accounting software around. The reality is no matter how much of a gauge that you might feel you have on your expenses, accountants (whether they’re independent or work for a local accounting firm) are trained in how to assist you with your bookkeeping. They’re definitely a wise business investment to make for your sake as well as your home-based business.
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