Do you have a lot of medical bills that you pay on each month? Could those medical bills be deducted from your tax bill this year? I was helping my mother take care of all of her finances after my dad passed away. I didn't realize how many bills she had coming in each month for medical treatments that my dad had undergone months, even a year earlier. I started doing some research about medical bills and tax deductions. If you have medical bills, take a minute to read through this blog to gain some knowledge that can help you decide what you can do when tax time comes around.
As a small business owner, it is important to keep your books in order. Keeping your financial house in order is necessary for your business to succeed.
1. Keep Things Separate
One of the smartest things you can do as a small business owner is to keep your business and personal expenses separate. You are going to want to have separate accounts so that yours don't mix at all. This will help you keep better track of your business expenses and income. Having separate accounts is also a great way to build a credit rating for your business that isn't based on your personal finances.
2. Get Things Automated
There is no reason to do everything manually in today's day and age. Work with an accountant and figure out what you can automate. For example, you can link your bank account to your business software so that you can keep your accounting records up to date. Linking your bank account and credit accounts to your accounting software will make it a lot easier to track all of your expenses and income.
3. Review Financial Records Weekly
At least once a week, either you or your bookkeeper should review your finances. That includes making sure all of your income and expenses are categorized correctly in your accounting software. That also includes ensuring that invoices are paid and that your customers are paying you for the work you are doing. A weekly financial check-in can help ensure that your business stays on track.
4. Engage in Quarterly Reviews
At the end of each quarter, you should engage in a quarterly review. With a quarterly review, you are going to be analyzing your bookkeeping and accounting records. This will allow you to see if you are experiencing an incline or decline in sales through the year and your expenses. Over time, you can compare each quarter to the one before it, and you can compare quarters across years as well.
5. Track Deductions Accurately
Tax laws are constantly changing, so be sure to check in with your accountant on what type of expense you can deduct. Ensure that you are keeping detailed records of your expenses. That means doing more than inputting your transactions into your accounting software; that means adding the digital recipes that go with it and adding detailed information about what the transactions were about and how it benefited your business.
As a small business owner, you can improve your bookkeeping practices by keeping things separate, automating as many financial processes as possible, checking your financial records weekly, engaging in quarterly reports, and tracking deductions accurately. A good bookkeeper can help you with all of those tasks. Reach out to one at a company like Peggy's Tax & Accounting, LLC.
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