One of the dreaded tasks of owning a small business is doing your own bookkeeping and accounting. When you fall behind on your books, it can become very disheartening. You’re continually trying to dig yourself out and get caught up, only to get more behind.
Soon, it seems easier to just put the bookkeeping tasks at the bottom of the to-do list rather than to face them. If you find yourself in this situation, there is hope. Take a look at a few of these tips on what to do when you fall behind and how to stay on top of bookkeeping tasks for the future.
Before we get to the to-dos of how to get caught up, it’s important to understand why you shouldn’t fall behind in the first place. There are some unwelcome consequences that can come as a result of not keeping up on your books, especially when tax season comes along.
The most dire of these consequences is losing your business all together because of poor planning. A more likely outcome from messy record keeping is an IRS audit. No small business owner wants to deal with an IRS audit.
Audits can halt your business growth because of the time and attention it takes to provide all the appropriate documentation. And if you are behind on your records, finding the receipts and information the IRS needs could prove troublesome.
As tempting as it may be to ignore your small business bookkeeping needs, it’s worth setting aside some time to get caught up before tax season comes around.
The first thing you need to do to get caught up on your books is to ask yourself some hard questions. You’ll want to ask and answer these questions honestly:
Answering each of these questions will help you know the right moves to make next.
Once you’ve decided you do need to get caught up, there are a few steps you’ll need to take.
Once you get caught up, it’s much easier to stay caught up. The IRS requires you to keep receipts for expenses over $75 for seven years. Make it easier to keep current by going paperless.
As you are processing your paperwork, you can create digital records and keep track of important documents with some of these tools:
Don’t wait to get caught up on your bookkeeping tasks. Tax season will be here before you know it and you’ll want to be organized and prepared. Block out some time and use the tips and tools in this article.
Everyone gets behind occasionally, but creating an organized system will help you avoid costly mistakes in the future. Act now to save yourself time and money. You’ll appreciate the peace of mind that comes from being ready.