Business and tax are two inseparable entities that can’t stay away from one another for long enough. Every year the tax season arrives and with it comes the tax filing complexities. Even though the tax season arrives yearly it is advisable to work on it all throughout the year else you’ll end up creating a mess with excessive workload to handle. In this post, we will take a deeper look into How to do tax preparation for small business for tax season efficiently.
Small Business preparation for Tax Season
Keep organized and updated throughout the year
Preparing for tax season isn’t a task that needs to be done only when the filing season is near. It is a process that should be well organized throughout the year. Keeping your financial position up-to date will not only make it easy for you to be well-prepared in advance but also ensure that you have your financial state at your disposal at all times so that you can make business decisions accordingly.
A professional bookkeeper can help small business owners in keeping the financial work organized all throughout the year, making it easy when the tax season arrives.
According to the financeonline.com, “21% of SMB owners feel that they are not knowledgeable enough about accounting and finance”. However, many small business owners avoid seeking professional help when preparing and filing taxes. While small businesses can save a handsome a few bucks if they don’t hire a professional, it can also backfire in many ways. As said above, preparing for tax season is a continuous process that requires tracking and recording of financial transactions throughout the year, SMB owners who prefer taking care of their Accounting and Bookkeeping by themselves can end up making mistakes as well as spend their valuable time doing something that they shouldn’t be doing.
Also, if you hire a professional Accountant who is more qualified to advise you on tax matters, you can save more money than you can lose if you do it by yourself.
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Separate business from personal expenses
While many business owners do spend from their own pockets, they should keep the expenses separate as it not only simplifies the process of managing finances but also helps in claiming tax relief when the tax season arrives.
Know which business tax return you need to file
Small Businesses can fall under many different categories like Limited Liability Partnership, Limited Liability Company, Single Member LLC or Sole Proprietor. And each category has it’s different set of rules and tax rates. Therefore, business owners need to classify their business before they go for filing their tax return. Businesses can lose a significant amount of capital as they could end up overpaying taxes, failing to classify their business.
Technology has made our lives easier and the Accounting profession isn’t new to it. Using Accounting software like QuickBooks can help small business owners automate their day to day tasks and keep the financial records organized while they are safe and secure under multi-layer data encryption that accounting software uses.
Tax preparation for Small Business – Preparing for tax season isn’t as difficult as it sounds. All that needs to be done is keep the financial processes well-organized all throughout the year. While business owners have other core responsibilities to handle, they can hire a professional bookkeeper to maintain their books.
We are living in a smart age where technology drives us to become better at our work each day. Technology has completely transformed how we used to work.Tasks that required hours of manual and mental work a decade ago, can now be completed with just a click. Each and every industry is benefiting from this technological advancement and Accounting & Bookkeeping industry is one of them that is of concern to us.
Accounting and Bookkeeping is an ever evolving landscape that has adapted pretty well to the technological boom. From the manual paperwork to using Excel to using Accounting software, the Accounting industry has come a long way.
Accounting software is an application software that can perform various accounting and bookkeeping tasks like record: financial data of a business, payroll, accounts payable, accounts receivable and many more. It can also reduce bookkeeping discrepancies that can prove to be costly. Accounting software varies widely with the functionalities they offer and are designed in accordance with the business requirements(small business and large business requirements can vary widely).
However, when it comes to best Accounting software for small businesses, the one name that pops up instantly is ‘QuickBooks. According to acecloudhosting, QuickBooks has around 800M global small businesses and self-employed customers, and 56M prospects visiting QuickBooks every year. But what makes QuickBooks best for small Business. Here are a few key features that make QuickBooks the stand-out Accounting Software for small businesses:
Features of QuickBooks for Small Business:
Mainly QuickBooks offers two products that are:
QuickBooks Desktop which is a one time purchase software that is installed on your computer and offers robust inventory management, job costing, and industry-specific features and reporting.
QuickBooks Online offers quite similar features to the Desktop version with the major difference being that it is a cloud-hosted platform.
However, our concern is QuickBooks Online which currently serves 4.5 million global customers with a net add of 1.1 million new customers in FY’19.
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Key Features of QuickBooks:
One of the features that makes QuickBooks Online the best Accounting software is that it automates daily tasks like handling recurring invoices, bill payments, payment reminders, sync bank and credit card transactions data; bank reconciliation and many more such tasks, thereby saving time as well as avoiding human error.
QuickBooks further offers excellent reporting with predefined templates available like general ledger, trial balance, 1009 transaction reports, P/L templates, etc. Moreover, it offers graph features that can be used to analyze data easily and make business decisions based on the same. It also allows you to schedule business emails and ease off the manual workload.
QuickBooks Online offers email invoicing features along with other features like accepting online transactions, e-signatures and saves time. You can optimize emails for mobile devices as well as syncs easily with Gmail accounts making it easy to send invoices via your Gmail account.
QuickBooks Online can be integrated with many third-party apps and software that you may be already using. Some of the popular integration include CRMs, email, e-commerce platforms, payment processing, time tracking, payroll services and many more
QuickBooks Online also comes with a mobile application which makes it easy to be accessed from anywhere in the world, using your mobile device. You can do the following using the QuickBooks Online mobile app:
- Create, customize, send and track invoices
- Click photos of receipts and attach them to your expenses
- Reconcile transactions
- View customer information, add new customers and message customers directly from the app
- View data such as your account balance, accounts payable, accounts receivable, profit and loss report, and open current and past due invoices
- Accept online payments
QuickBooks Online Pricing:
- Simple Start Plan that costs $25/month and supports one user.
- Essentials Plan costs $40/month.
- Plus Plan costs $70/month.
- QuickBooks Advanced costs $150/month.
While there are many Accounting software out there, QuickBooks for Small Business has always stayed a step ahead from its competitors, mainly due to easy accessibility and affordable pricing. So if you still don’t use an Accounting software and figuring out which will be the best, just go for QuickBooks Online, it has it all!
The unanticipated Corona outbreak has left the global economy and businesses in a state of anarchy. While businesses are still trying to figure out the best way to survive during these tough times, a Business Continuity plan can be their best bet to pull them out of this crisis.
So let’s discuss in details what is a BCP and how it can be of help:
What Is Business Continuity Planning (BCP)?
A Business Continuity Plan(BCP) is designed to pull out companies from potential threats and risks. It ensures that assets and personnel are kept protected so that they are able to function efficiently during tough times and make sure business operations aren’t hampered.
BCP assesses each and every risk that can cause a failure to the businesses operations process and plans out risk management accordingly. Risks can be either natural disasters like fire, flood etc or can be man made like cyber attacks. While every company and industry has a different set of driving factors and therefore BCP differ accordingly, a general business continuity plan includes the following:
- Determine how exactly these risks will affect the normal functioning(or operations) of the company
- Mitigate the risks by enforcing safeguards and procedures to mitigate the risks
- Testing procedures to ensure they work
- Reviewing the process to avoid any delays
- Policy, purpose, and scope
- Goals and objectives
- Key roles and responsibilities
- Risk mitigation plans
- List of tasks required to keep operations flowing
- Explanation of where to go during an emergency
- Information on data backups and site backup
- Plan maintenance protocols
- Coordination with local emergency personnel
- Contact information of management personnel
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5 Steps for Developing a Business Continuity Plan
As businesses have been suffering the mayhem caused by the COVID-19, they are striving hard to get back on track. However, one can use a Business Continuity Plan to come out of this trouble. Here’s how you can develop a solid BCP.
Business Impact Analysis:
Start with analysing the impacts of the risk on your business and use the information to figure out the processes that are having the most impact on the business’ financial and operational functions. Once you have identified the pain points, move onto the next step which is recovery.
Now since you know about the pain points, in this step, you must identify and explore what steps need to be taken in order to recover critical business operations and make them functional.
While you have devised a recovery plan, it is the continuity of the process that will define how well you recover from the losses done and for how long your operations will continue to be functional. Therefore, it is necessary to form(organize) a continuity team to monitor the recovery process.
Till the time you aren’t testing, you won’t know what’s working best for your business. It’s wise to test various business continuity plans in order to make sure which is the most effective.
To ensure that the continuity team formed above to monitor that the recovery plan is performing its task with efficiency, training of the team is very vital. Training is what is very essential for skill development as well as to keep up with the ongoing trends which is the need of the hour
Tough times require both courage and extraordinary measures. While the economy is suffering a downturn and businesses are taking tough steps like downsizing to cope up with the corona outbreak, a Business Continuity Plan can significantly help businesses find better ways to get back on track.
The ‘Bottom Line’, ‘Numbers’, ‘Sales’ are some entities that are self-explanatory in any business. Especially when it comes to real estate, the number of properties sold successfully and an impressive sales record are enough to reflect the business. But, all of this is true if their is uncompromising accuracy, vigilance and standardisation in the numbers presented and their credibility. Which is where experienced accounting comes in the picture. Showing a promising real estate practice on the basis of inaccurate books can be a bane for your business and can tarnish your image in the industry as well as with your clients.
In this blog, we will talk about the common real estate accounting mistakes that your business needs to avoid in order to get through the tax season seamlessly. If you are cautious to dodge these commonly encountered errors, then not only will your books be accurate, they will also be dependable and actionable.
Mistake No 1: Realigning Funds Before the Transaction is Complete
This is a very common business error, if we may say with property and real estate accounting. The entrepreneurs are seen to be disbursing the funds before the deal is closed. This not only is a malpractice, but at the time of doing the books, is an additional wastage of time for your bookkeeper, as they need to go back and check the completion and the authentication of each transaction that you have made. In accounting terms, a transaction is considered revenue and can thus be acted upon only when the chain is complete, in real estate terms, it is when the keys are finally exchanged.
It is important for real estate entrepreneurs to keep this in mind at all times while confirming a transaction to be a revenue or before its disbursement. So that, your Accounts Payable are accurately aligned with your Accounts Receivable.
Other Blog – IRS Tax Relaxation Deadlines for Covid-19 (With State Regulations)
Mistake No. 2: Tracking Commissions Additionally From an Accounting Software
When your brokerage is tracking commission additionally and alternatively from the main accounting software that you are using, then you are backing up on age-old data entry to pay those commissions. Honestly speaking, this redundant data entry puts you at a greater risk, with your books being rampaged with human error and threats.
Ideally, using accounting software or any accounting technology is a matter to make things simpler and more convenient. Therefore, you need to have a commission management system in place that can seamlessly integrate with your accounting system and help make things more convenient for you.
Mistake No. 3: Insufficient Training of the Accounting Software
If you have an in-house or a local accountant, who you are presuming will be on track with the technological developments and has a proficiency in the accounting software of your choice, then you might be going far-fetched. The idea is that you need to have someone who is an expert and a thorough professional when it comes with dealing with your accounting tools so that bookkeeping is an easier and more convenient feat. If you take it into consideration, having someone who is not-well versed and trained in these tools, will not be able to optimize the efficiency of the same and might make errors. Therefore, it is essential to have someone who is trained and has a smooth knowledge of state-of-the-art accounting tools and technology, especially the ones preferred for use by your business.
Mistake No. 4: Not Taking Backups
This is a mistake that cannot be stressed-on enough. If you are an entrepreneur, then you need to know gone are the days, when people had stacks of paperwork in physical form, that they could go back to and tally whenever needed. This was not only time consuming, but took a lot of space and was adept with errors on all levels. With the coming in of the right accounting technology, you need to save time, effort and error. Taking backups of your data is ever-important so that you have securely kept all your essential financials readily available whenever needed. Real estate businesses are generally seen to lack in this imperative feat.
Real Estate is an exhaustive and a challenging field. You need to constantly be at your alert-best and on your toes. But the accounting part of it, need not be that dreadful if done the right way. Being on the right road of accuracy, having a dependable team that backs your efforts and avoiding these common accounting mistakes can help you keep up with your books and also get through the year-end stress-free. We hope this blog will help you highlight some common errors, and avoid them in your future accounting journey.
Accounting in the year 2020 is more than just crunching the numbers and availing maximum tax benefits. It is about going ahead and overcoming the major challenges faced by accountants that are hindering you from achieving your goals. The failure to see these and acting on them promptly, not only affect your profits, but derail you from your path of efficiency.
This blog is a round-up of all the challenges and industry forecasts for the year 2020, and how you can act on them today, and secure your accounting practices with a clear and promising future.
Accounting Challenges Faced by Accountants Today:
Keeping Up With the Changes in Tax Regulations:
Tax compliance and maximising client benefits is the base task for any tax accountant. But the constant changes in taxation are making the need to keep up with the updates, more important than ever. Whether it is to do with regulations, client benefits, revenue generation, etc. or more complex changes, failing to abide by which can lead to errors and monetary fines. It is very important to be up-to-date with the current tax regulations and constantly be updated with any changes occurring during the financial year.
Repetitive Tasks Everyday:
As an accountant, there are chances that your daily task sheet almost always involves the same tasks in a clock-work manner. The excitement of variety or differing accounting challenges in your job is absent as an accountant. Additionally, when there is a monotony of tasks then there are chances for lack of interest and soon the creeping in of errors.
On an average an accountant works an average of 80 hours a week. And when it is the year-end, this work time almost always escalates. This leads to an exhaustive work-life balance, where you are almost always bundled under a pile of files. Not missing the need to still be innovative, vigilant and active for each of your clients. It is imperative to have a reliable back-end team as an accountant, with whom you can delegate your tasks effectively and reduce your work stress.
Increasing Competitiveness by the Day:
Accountancy is a swelling field with new entrants coming in each quarter. Now, with more candidates comes more competition. No matter your certifications and qualifications, each accountant is having to compete and race with an exceeding number of competitors in the field. Therefore, the need to have a typical niche and an edge that makes you more competent and different from your competitors is the need of the hour.
Also Read – Different Branches of Accounting: What Are They and How They Work
The Training is Never Over:
The reality of being an accountant is that you never really finish your training. There are always more certifications, qualifications and the unending need to be updated with changes in tax regulations. As an accountant, you almost always continue to train yourself in the span of your career. It is important to always be updated with refreshed knowledge and continuously evolving with new techniques and the software support in your field.
Accounting is a career that is bound by dates and timelines. Missing one by error, snowballs into multiple adverse effects, fines and troubles. Not to miss, the loss of your integrity, market value and your valuable clients. Therefore, as an accountant it is of utmost importance to understand the importance of these deadlines, abide by them and organize your work in a way that you are always ahead of your schedule. It is important to have a strong back-end team that can either ease this organization for you or come on-board and share your swelling responsibilities to ease you down.
Automation and AI Taking Over Traditional Accounting:
In the wake of increasing business competition, accountants are now having to compete head to head with holistic accounting softwares and AI support. It has not only brought convenience for your potential clients, but has also led to the recurrent need to understand and ace these software. The only way to get over this challenge, is to be able to understand and gain expertise on these innovations or have a team of individuals who can aid you in this field. So that you will be able to get more support and increased client satisfaction in your career.
Accounting forms the base task for effectively running any business. It is an omnipresent need of any organization, no matter how big or small it is. But behind all these truths, is the ultimate fact that accounting as a profession is not a cakewalk. There are multiple accounting challenges, problems and recurrent issues that are faced by accountants on a daily basis.
However, proper management, meticulous planning, and the right team can get you ahead of these problems and make life easier for you. Meticulous streamlining of your profession and having the right strategization can help you in taking charge of your business better. It’s time to pull up your socks and get ahead in your business with the right knowledge like never before!
Bookkeeping can be an intimidating and a time consuming task for a majority of entrepreneurs, it is majorly for this reason that it is pushed behind on the task sheet, and that is when the problems begin to creep in. Another important factor is that as your business grows, your bookkeeping needs have to be more organized, streamlined and updated. With expansion comes the need to spend more time handling the core operations of your business, and less time on administration and financial logistics. This is where the need to outsource your business’ bookkeeping issues and accounting needs come into the picture.
There are various Bookkeeping issues that can be solved just by outsourcing it to the right Bookkeeping Service providers. Here are the key issues of any business’ bookkeeping, that can be solved by outsourcing it:
Bookkeeping Issues Solved by Outsourcing Experts:
Making the Tax Filing Process Easier:
Filing taxes is one of the most intricate and challenging tasks in a business’ financial calendar. Being tax compliant is ever important. Outsourcing Bookkeeping tasks helps you prepare accurate statements and reports as well as being timely and scheduled with its submission. These experts know detailed tax laws and regulations be it on the federal or the state level and help you gain the maximum benefits and savings during the tax season. Not to miss, you also get to be free of the stress that the tax season brings with itself.
Scale Your Bookkeeping Effectively:
Business’ are dynamic in nature and are ever-evolving with time. Therefore your operations also need to be of the type where they adapt to the changing times and keep scaling. Outsourcing bookkeeping can help with these scalability needs. It helps you transition seamlessly into enterprise-level systems by updating the software infrastructure, daily tasks and consequent reporting that can help you in your expansion. Get ahead in your business, with outsourcing your bookkeeping operations to experienced professionals who can handle your business at every stage and status of operations.
It is very well known that if you are running a business, there is never enough time to do everything effectively. Therefore, finding strategies to maximize the time at hand is more important than ever. Bookkeeping, as said before, is one of the most common tasks that is sidelined at the time of delegating time for an entrepreneur. But, this leads to future issues and confusions. Therefore, by outsourcing your bookkeeping tasks to the right professionals can help you take off an average of 4 hours every week, to delegate to the core operations of your business like sales, production, marketing, etc. With more time at hand, and less points to stress about you will always be ahead of your schedule while running your business.
Access to Key Information:
With outsourced bookkeepers, you do not have to swim through pages and pages of unending financial data to do your business, instead these experts give you comprehensive reports, actionable financials and accurate financial statements that can help you with the key indicators that are of importance to your business, they organize it into blocks of the most relevant information that is essential for you to run your business effectively. This helps you make better sense of where your business is currently standing and where it is headed to in the future.
Gain Access to Updated Financials:
The most important factor to be kept in consideration while bookkeeping is to have books that are updated, accurate and error-free. Additionally, there are new advances in the bookkeeping industry, accounting software and regulations. Being abreast with them all, is a challenge in itself. By outsourcing your bookkeeping operations to experts, you get updated, accurate and relevant financial information that helps your business keep up with the times better. Not just that, you are able to be a step ahead with state-of-the art accounting technology and tools that help you gain better control over your bookkeeping and accounting operations.
Outsourcing Bookkeeping is the way ahead in the financial market. Running a business is becoming a strenuous and all-inclusive job that requires an entrepreneurs complete dedication 24×7 365 days a year. Therefore, having a team that makes running your business easier and adds the necessary value base to all that you do is key to the success of your business and increasing your financial health multifold.