March is here, and soon will come the blossoms of spring. So lovely! Unfortunately, there are a few less savory arrivals also marked by spring, like tax day. Are you prepared?
As a small business owner, part of your responsibility as CEO and CFO is to ensure that you have accounted for and reported your organization’s income and tax liability accurately. Ideally, you have systems in place throughout the year to track your revenue and expenses.
If that is not the case, no need to panic. With proper preparation, you’ll be ready for April 15. But the time to start is now. Here are three tips to help you get there.
Let’s talk about something you likely do every day: drive your car. When you’re in the driver’s set you determine where you go and when. You set the destination and the course. You feel a sense of relief and accomplishment when you arrive. You have control to set your path.
Now, think of that analogy when it comes to managing your business’ finances. You can take your place in the driver’s seat and take charge of your journey. Or, you can take a passive approach and be the passenger, with little say in where you’re going or how you get there.
Which method do you prefer?
What is the difference between bookkeeping and accounting? Bookkeeping is a function of accounting. It is transactional. It is the recording of your practice’s daily transactions. Daily transactions include producing invoices, paying bills, running payroll and reconciling accounts. These tasks allow you to create different financial statements. Accounting is transforming the daily business transactions into financial statements that are easily understood by the practitioners/clinician.
Ah, the infamous side hustle. It has become more and more common for people of all ages, but particularly Millenials, to pick up an extra job in order to meet their expenses. For some, it’s also a way to dip their feet in the waters of entrepreneurship without having to get their hair wet.
The good news is that you are a business owner, my friend. Congratulations! Whether it is what you do as the sole means of earning a living or part-time, you have created a service, drawn customers, and gained income from the enterprise. That means that financial management of and bookkeeping for your enterprise have jumped to the top of your list of responsibilities.
If a business owner keeps poor accounting records, their tax accountant has no choice but to file taxes based on sloppy and inaccurate financial statements. In this situation, the tax accountant can’t minimize the client’s tax liability, because they are basing their work on inaccurate financial statements.
You can see now why I’m so happy to hear your commitment to doing better. Make it your project to get yourself organized this month, and your mission to keep up with good habits throughout the year and you’ll find that keeping your records updated and organized isn’t scary at all! Here are my suggestions:
“I can’t keep doing this,” said Maggie as she sat in yet another boring meeting. For ten years, she had climbed the corporate ladder to become a highly-respected engineer and project manager. Sure, the accolades, awards, and bonuses were nice, but she felt unfulfilled and bored with her job. She was tired of working long hard hours for someone else. More importantly, she was tired of missing out on life. How many more of her son’s soccer games would she miss?
How many times would she have to tell her daughter that she couldn’t make her ballet recital due to a business dinner? And, don’t even get her started about the lack of quality time between her and her husband. Yep, it was evident to Maggie that she needed to make a change.
It was 6:00 am, Brandi, a freelance copywriter and graphic designer instinctively reached for her cellphone to type herself a note about a killer ad line idea for a client. (“Is your business financially sound? Think Again.) “Not bad,” she said as she placed her phone on the nightstand and jumped out of bed to prepare for the day. 40 minutes later, Brandi sat at her desk, in her home office, sipping on hazelnut coffee from her favorite mug. She read through her emails, checking to see if one of her newer clients liked the radio script she had written the day before. They did. She smiled.
After she had responded to the rest of her emails, the next task on her list was to make sure her invoice system was up-to-date. It had been 18-months since she had taken the plunge into self-employment and business was booming.