As a small business owner, you have a lot on your plate so accounting might be something you’d rather deal with when you have to, not throughout the year.
If this is your approach, tax time is probably very stressful for you. You spend your days sifting through the numbers and questioning why it has to be so difficult, all while wishing you were spending more time checking other things off your to-do list.
While it doesn’t sound like something you have time for, you can avoid all of this by transitioning to monthly, or even quarterly, accounting. The switch sounds daunting, but in the long run, it will give you peace of mind, help you avoid common problems, improve your business’s performance, and make everything easier when tax time rolls around.
Peace of Mind
If you are waiting for tax time to focus on your taxes you probably find yourself worrying about getting everything done in a timely manner. It can be overwhelming to gather everything you need and provide accurate numbers.
Your concern likely leads to much bigger questions like “Am I paying too little in business taxes?”, “Will I have a big tax obligation this year?”, “Is my business financially healthy?” These questions are enough to add additional stress to an already busy tax season.
However, it’s totally avoidable. There are just a few simple steps you can take to ease your worries about tax time:
Get in the right mindset: Your financials are not something to avoid until tax time. Regular maintenance eliminates the worry and puts you in a position to reach your business goals more easily.
Lay a strong foundation: With the help of technology, you can automate many accounting processes. Aside from regularly inputting the information, you won’t have a whole lot of back-end work because your apps will be doing it for you.
Regular financial reporting: With the help of your accounting software, you will be in a position to regularly pull financial reports. Through regular reporting, you can make real-time adjustments while constantly understanding your finances, so there aren’t any surprises during tax time.
Work with a financial partner: A financial partner helps with each of the aforementioned steps. Working with them will ensure you are not avoiding things until tax time, using the right tools to help you reach your goals, and reporting regularly to keep your finances on track.
Working with your finances regularly will practically eliminate the troubling tax time questions and give you financial peace of mind.
Avoid Common Problems
There are plenty of issues that may arise within your financials. Once these start to pop up, they can have a significant impact on your business. Here are a few hidden pitfalls that can ruin your accounting:
Security issues
Reconciliation
Equating cash flow with profit
Not separating payroll employees and contractors
Not keeping up with your budget
Not using a P&L
Each of these causes its own problems within your accounting and if you are only checking them during tax time, the problems only get bigger.
While these common problems aren’t always entirely avoidable, through regular accounting you can catch them more quickly. It will take a problem that’s been growing for a year and turn it into a problem that’s only been growing for a month.
Improved Performance
Through regular tracking, you can improve the performance of nearly every area of your accounting. Here are a few examples of the benefits of regular tracking:
Keep a tighter budget: By tracking your budget regularly, you can see where you are overspending and make the needed adjustments. This will also help you to see where you may have extra funds and allow you to allocate those towards areas that spark more growth.
Stronger cash flow: Keeping an eye on cash flow shows you when there are late invoices in your accounts receivable. These late payments can negatively affect your business, so a regular check will help keep the money flowing in the right direction.
Accurate forecasting: Your financials are used to create forecasts so the most up-to-date reports will improve their accuracy. These can show opportunities for increased revenue and point out potential problems that may arise.
Your key reports like budgets, cash flow, and forecasts are improved and become more helpful when you are regularly populating them with accurate information.
Make it Easier
In addition to peace of mind, fewer problems, and improved performance, prioritizing your accounting all year round makes everything easier. You will get into a habit of continually tracking and improving reports, embracing your technology and accounting tools, and working with a partner (hopefully) to help you stay focused and on track throughout the year, not just during tax time.
If you are in the market for an accounting partner to help you ease your mind and stay on top of your finances, turn to SIMPLY Financials PLUS. We provide simplicity, clarity, and handle the financials, providing you peace of mind and a big picture view of where your business is going.