Small business owners are never excited about the little details of managing their everyday expenses. However, by staying ahead of your bookkeeping, you and your company will reap the tax benefits!
With these few steps, you can take a proactive approach to handling your business expenses on a more regular schedule.
5 Steps For Handling Your Business Expenses
- Increase the amount of money in your pocket with good bookkeeping: Each small business has a multitude of expenses, from labor to equipment, and should be deducted from profits in order to ensure the maximum tax benefits each year. In order to gain the most from these tax breaks, it is important to keep organized and thorough records of these expenses. Keep your receipts organized, and you’ll be more prepared come next tax season.
- Separate your personal and business finances: We strongly encourage you to open a separate account for all of your business needs. When you intertwine your daily spending habits with business, the ability to create a hassle around tax time can be a headache. Business receipts and expenses will be much easier to itemize, if they are separated in their own account. Likewise, by using a financial software system, such as QuickBooks, you can streamline the entire process through a few simple steps.
- Find out what is deductible: Most small business programs, such as QuickBooks, will provide you with lists of what you can deduct from your business, onto your taxes. Items such as your car, home, supplies, meals, travel, payroll, subcontractors, equipment, and more, can all be deducted, as long as they apply towards your business. But, be mindful of what you deduct, when it comes to meals and travel. These should be business minded trips, and not mostly for personal use.
- Keep your paperwork in order: By keeping track of receipts, checks, and bills, you’ll be able to quickly find what is deductable and how you can use your expenses to your advantage. We encourage you to spend a little time each week, calculating the total amount of these expenses, and placing them into your accounting system. This will save you type during tax season, when you can generate quick reports to input into your forms. Remember to hold onto all business receipts, in case of an IRS audit.
- Ask for help: No one is expected to have all the answers, and it’s important to know when to ask for help. If you’re not sure if something can be deducted, look to a CPA or tax professional to help you through this process. These individuals are designed to help you get the most money back into your pockets, ensure you’re making use of all the breaks properly.
Stay One Step Ahead Of Your Business By Keeping Track Of Your Expenses
For more tips on how to manage and insure your small business, call the professionals at E&Y Insurance today! (248) 362-1313