Why you shouldn’t wait until April to clean your books

Business News | 27 Nov, 2018 |

Taking steps now to review and clean up your business books is essential instead of waiting until January — or even April 14, 2019. Consider these reasons.

1. There are new tax laws.

If you made money this year as a business owner, it’s essential to have your tax accountant review your books now, so you are aware of the tax changes, learn how they might impact your business and give you time to make any necessary adjustments. While taking this step now is always important, it’s especially so this year because of the new tax laws. There are many aspects to the tax laws that appear to be beneficial for small businesses including:

• Lower individual rates

• A 20 percent deduction for small businesses filing through entities including S corporations, partnerships and self-proprietors. Note: Not every business qualifies.

•  Expanded 179 deductions regarding business equipment expensing vs. depreciating.

There’s also elimination of some deductions we’re accustomed to such as travel, entertainment membership, entertainment and meals. ( Note: We’re not offering tax advice here. Please speak to your tax accountant to learn how the new tax laws impact your business. )

Does tackling the whole year now sound like too much for you? It’s helpful to have at least the first three quarters of 2018 done so your tax accountant can make sense of your information.

2. The longer you wait, the more difficult it is to recreate! Do these questions sound familiar? What was that expense for back in February again? Was that personal or business money? People tend not to remember what expenses are for if they wait to put their books in order until the end of the year.

3. Planning for 2019 should happen now. If you don’t have accurate information now, it’s difficult to plan for next year.

4. If you’re a do-it-yourselfer, take heed. For those do-it-yourselfers who coop themselves up in a room for days scrambling to get their books in order, what happens when you can’t find receipts? What happens if your internet goes down? And don’t forget those 1099s. Many people wait until January 31 to file them, causing software jams and making it difficult to get help from your bookkeeper or accountant.

5. If you outsource, take heed, too. If you wait too long to get everything in order, it might be difficult to find someone qualified to get the work done. Last minute work means you’ll likely pay more. You also won’t be a priority. If you’re last in line and the turnaround will be slower than if you start now.

6. 1099s are due at the end of January. You’ll get fined if you don’t turn them in on time. Gather that information now.

7. It often takes longer than you think it will. Whether it’s personal or if you outsource someone to do it, you will run into unanticipated issues.

Tips to keep your books in order year-round:

• Know your tax accountant’s availability. Availability is better beginning mid-October. It’s much easier to get meetings now than in February.

• Help your bookkeeper help you by getting information to them in a timely manner or giving them what they need to do their job such as having access to bank account. If you make it easier for your bookkeeper, the work will also be less expensive and you will be more of a priority.

• Get your books done on monthly basis.

• Keep receipts.

• Have a good software system.

• Set up bank feeds into your software.

• Apply payments correctly or having someone work with you on it.

With the holidays approaching, keep in mind that procrastination provides more stress all around. Doing something now is not only good for your mental and physical health, but you’ll also likely enjoy the holidays a little more!

 

Ruth Urban is president and CEO of On the Money, a team of self-proclaimed bean counters, number crunchers and calculation nerds who are forever dotting the i’s and crossing the t’s. But we are also compassionate coaches, passionate cheerleaders and impassioned mentors who care wholeheartedly about their clients and take joy in their successes. On the Money’s mission is to help small-business owners take control of their finances by creating systems and tracking tools, then teaching them how to use those tools to make better-informed money decisions.

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