Record keeping is boring! We all get it, but as a business owner, providing the right information to your Bookkeeper at the right time can actually make you happier by lowering your stress, saving you time, and most importantly saving you money!
More than this, growing your business success relies on having the basics right – tax compliance, state reporting, and accurate bookkeeping.
We can work with you to automate the provision of much of this information (e.g. by providing us with qualified access to bank statements etc.). But in general, the question remains: What should I communicate, and when?
Every Pay Period
- Payroll Information: If you have employees, its crucial to keep track and send over your payroll records in a timely manner. This includes W4’s, and hours worked, and any changes in employee location.
Monthly
- Bank Statements: Your bank statements provide a record of all your transactions, including deposits, withdrawals, and fees. Making sure these are reconciled monthly will confirm that your records match the banks records.
- Sales Tax Reports/Summaries: Your monthly sales figures are crucial for tracking your revenue and ensuring you’re meeting your business goals. It is crucial to have your financial information monthly for compliance with tax laws. We want to make sure that your sales tax is paid on time, to avoid late fees and penalties.
- Credit Card Statements: If you use a business credit card, its essential to get us these statements monthly so that we can track the expenses.
When they become available (minimum every 6 months, but preferably monthly)
- Loan Documents: If you get a new loan or pay off a loan it is important to get this information to your bookkeeper as soon as the documents are available. These documents provide information that is needed so we can include the loan amount, interest rate, and payment schedule. This is essential for tax compliance, and recording this in a timely manner will result in a lower tax liability.
- Line of Credit, Mortgage, and Loan Statements: Your monthly statements are critical to have in order to keep your liabilities accurate. We need to make sure that we are entering the monthly balances, interest, and payments. This will help you to understand your businesses financial health.
- Expenses (Mileage, Home Office, Medical): If you have additional expenses, please try to get those to us monthly or quarterly so that we can get these entered. Accurate recording of expenses ensures that financial statements are up to date and accurate reporting is essential for making informed business decisions.
- Contractor Information: If you pay any service contractor (Individual or LLC) $600 or more in a calendar year, you’re required to provide them with a 1099 form at the end of the year. The penalties for this can be significant if this is not done. In order to make sure there are no errors or deadlines missed, it’s safest to have anyone you pay fill out a W9 and forward it to us immediately. If they don’t meet the $600 requirement at the end of the year, we won’t file a 1099 them. But just in the case they refuse to fill one out after the fact, its’ safest to have all contractors fill one out before any payments are made.
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As we continue to discuss these important records, let’s look to how providing this information at the right time actually serves to keep you safe.
Tax Compliance. One of the most crucial reasons to get your bookkeeper your monthly records is tax compliance. If your financial records are inaccurate or not up to date, you may miss out of tax deductions or credits that could save you thousands of dollars. Additionally, the Internal Revenue Service (IRS) and State tax authorities can impose penalties and interest on late or incorrect tax filings, which can add up quickly.
Business Decision Making. Accurate and timely record keeping can also help you make the most beneficial and informed business decisions. By tracking your finances, you can identify areas where you may be overspending or where you can cut costs. This information can help you make strategic decisions that will help your business grow and prosper.
Budgeting. Accurate financial records are essential for creating and managing your budget. Without accurate financial records, it can be challenging to determine your business’s current status and create a budget that aligns with your business goals. Keeping accurate and timely records, you can ensure that you have all the information you need to make informed budgeting decisions.
Mitigating Risk. Entering timely financial records can also mitigate risk. By tracking and timely submitting your finances, you can identify potential problems before they become more significant issues. This can help take action to prevent losses and protect your business’s assets.
Maxing your Tax Deadlines. Furthermore, failing to get your bookkeeping timely and accurate records can lead to delay in filing tax returns or extensions, which can result in additional cost and penalties. For instance, if you miss your deadlines, you may be subject to penalties and interest from the IRS. These can add up quickly and impact your business bottom line.
In the end, communication is key. The right information, as discussed above, will make you happier by:
- Making better informed decisions
- Ensuring filings are accurate, compliant, and on time, every time
- Preparing for tax season without stress
These basics will allow you to focus on your business, while we focus on your books.
