8 Ways to Create More Free Time by Cutting Your Record Keeping

Chances are you run a business because you’re good at something and you like doing it, not because you enjoy filing receipts and entering accounting information. Yet, if you don’t take the time to keep your books current, you’re really hurting yourself. Not only will you have some serious headaches come tax time, but you also won’t really know how well your business is doing.

That said, you don’t want to spend more time working with the numbers than what’s absolutely necessary. Here are a few ways you can cut down on the busywork portion of bookkeeping and get back to doing what you do best:

  1. Use a reliable accounting software package. There is a slight learning curve with implementing a solution like QuickBooks, to be sure. Fortunately, there are all sorts of training resources out there. The time that you spend learning to use QuickBooks will more than pay for itself in terms of efficiency later on. Even just using it to input checks, reconcile your various accounts, and create regular reports will be a huge boon to your business.
  2. Don’t put off updating your records. Small business owners generally don’t enjoy doing the books. After all, you got into the business because you’re passionate about something – and it’s not likely accounting. Still, by spending a few minutes each week to keep your records updated, you’ll save tons of time over the long haul.
  3. Avoid using cash. Cash generates extra record-keeping and puts you in a situation where you may lose out on various tax deductions because of a missing receipt. Debit cards really are the way to go, as they generate not only the receipt that you get at the point of sale but the bank statement, as well. Obviously, there are times when you need to use cash, but those instances are few and far between these days.
  4. Keep your business and personal accounts separate. This is a major mistake that many new business owners make. Even if you’re a sole proprietor and your business income and expenses truly are your personal income and expenses for tax purposes, bookkeeping is much more difficult if your accounts aren’t separate. Keeping separate accounts will also help you down the road if you want to form an LLC, incorporate, or try to get loans or grants for your business.
  5. Consider going paperless. By scanning in receipts, you can free up a significant amount of time over the long run. Not only that, there are a number of third-party applications that will allow you to attach scanned receipts to your QuickBooks data. The key here is to make sure you have reliable, regular backups of your accounting data. You should export that data regularly to an external hard drive or a flash drive, and consider storing it offsite or in a fireproof safe.
  6. Find automated ways to track your business mileage. There are now a number of GPS-based smartphone apps that can track your business mileage for you. You simply start the app, indicate that you’re traveling for business, and it will track your mileage. This saves the hassle of manually working through logbooks, adding up miles, and keeping all of that paperwork organized.
  7. Meet with an accountant and tax professional more than once a year. Ideally, you’ll meet with these professionals quarterly. At a minimum, you should do so twice a year. A single one-hour consultation each quarter could save you thousands of dollars on your tax bill for the year. One of the worst things you can do as a small business owner is to decide that you’re going to handle all of the accounting and tax work on your own. It’s not that you can’t do it, it’s just that the time you spend will usually result in less positive results than if you hire professionals.
  8. Educate yourself about what is and isn’t a legitimate business deduction. There’s no sense in spending time tracking specific types of transactions (apart from entering them into your accounting package) if they don’t fall into the right accounting and tax buckets. Learn about what expenses are deductible, and then make sure that you properly categorize them when you enter them into your accounting package.

Good record keeping pays off in several ways. It minimizes your tax burden and it helps you keep your finger on the pulse of your business. Implement these strategies today to make your record keeping a more efficient process.

[IMAGE CREDIT: Some rights reserved by redjar]

Get more information 888-5-TAXPLAN | Contact