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Tuesday Tips and Tricks
                                  February 19, 2013

Ten Small Business Bookkeeping Practices

 by DenverBookkeeper 

 

Small business owners often undertake tasks that they are not trained for in an effort to save money. One  of the most common tasks that are done in house, but should be done by a trained professional is bookkeeping. No matter who does the bookkeeping, there are 10 best bookkeeping practices to keep in mind.

 

1. If bookkeeping is not for you, you'd be much better off finding someone to take over this job. Well trained, experienced bookkeepers will help you track all of your income sources and expenses. A bookkeeper has the skills required to do the job efficiently and quickly. Many times a bookkeeper will serve as a second pair of trained eyes, spotting errors and making suggestions for improvement.

 

2. Make use of quality accounting software. A good software program will help you track expenses and income, posting them to the right accounts. You will be able to see exactly what your gross sales have been and what you've spent on office supplies.

 

3. Provide realistic solutions to cash flow issues and bankcard payments. Knowing what you have coming in each month and what your expenses are is critical to handling cash flow. An experienced bookkeeper will offer solutions that will work if there are issues from time to time in this area.

 

4. Most bookkeepers will have at least a working knowledge of how merchant accounts work. This is critical in order to negotiate the best rates and catch errors on monthly statements.

 

5. Credit card and bank statements must be reconciled each month to ensure no entries to you checkbook were missed. Every bit of money going out must be accounted for.

6. When clients are invoiced, outstanding invoices and collection procedures should be monitored. Be sure that every invoice includes the payment terms. These terms should be included in a contract if you use contracts.

 

7. Be very consistent. Specific times of the day, week, or month should be set aside to organize income and expenses into your accounting program. If you schedule specific times for these tasks, and stick with your schedule, each of the tasks will be much less daunting. Never allow things to stack up.

 

8. Keep a supply of any accounting or bookkeeping forms on hand. By keeping anything you may need on hand, you will make the best use of your time.

 

9. Use separate checking accounts for business and personal. Not only will this make it easier to reconcile your books each month, you will look a lot more serious to the Internal Revenue Service.

 

10. Always back up you data. This is something that I just can't stress enough. If you have a tragedy like a hard drive failure or a power surge, you risk losing all your data if you don't have a backup copy of your booking data. It doesn't matter if you backup to an online service, and external hard drives, or a thumb drive, just make sure you backup your files.

 

These 10 best bookkeeping practices are just a sample of what you should do when if you do your own bookkeeping. Of course if you outsource your bookkeeping with Off-Site Business Services, you won't have to worry about any of this.

 

If you have any questions or would like a quote on providing bookkeeping services, call us at 877-966-4441 or email us.

  

Deadlines, Deadlines, Deadlines

Upcoming tax filing deadlines for February and March from www.tax.gov.

 

February

 28

  • File information returns, including Forms 1098, 1099 and W-2G for payments made during 2012.
  • File Form W-3 with Copy A of all Forms W-2 issued for 2012.
  • File Form 8027 if you are a large food or beverage establishment.

March 

 1

  • Deposit payroll tax for payments on Feb 23-26 if the semiweekly deposit rule applies.
  • Farmers and Fisherman: File Form 1040 and pay any tax due. However, you have until Apr 15 to file if you paid your 2012 estimated tax payments by Jan 15, 2013.

 11

  • Employers: Employees are required to report to you tips of $20 or more earned during February.

 15

  • Corporations: File Form 1120 for calendar year and pay any tax due. For automatic 6-month extension, file Form 7004 and deposit estimated tax.
  • S Corporations: File Form 1120S for calendar year and pay any tax due. Furnish a copy of Sch. K-1 to each shareholder. File Form 2553 to elect S Corporation status beginning with calendar year 2013.
  • Electing Large Partnerships: Furnish Sch. K-1 (Form 1065-B) to each partner.

 

Making Payroll

If you find you don't have enough hours in the day to take care of your business operations, your clients and your employees, outsourcing key business functions such as payroll can be a cost-effective business strategy. In fact, payroll is the first function many small business owners look to outsourcing.

 

Why Outsource Payroll?

Managing payroll is an especially time consuming and detail-oriented task that can quickly consume even the savviest business owner. Some of the operational and fiscal benefits of outsourcing payroll to a third party service provider include:

 

Reducing IRS penalties -Small businesses are particularly vulnerable to financial penalties that can be assessed by the IRS when payroll taxes are filed incorrectly. By outsourcing to an expert, you can gain reassurance that filing deadlines and deposit requirements are met.

Reducing costs -Depending on your needs, outsourcing can be more cost-effective than hiring a temp, doing it yourself or adding to your staffing overhead.

Paying your employees by direct deposit - You may be able to save your employees a trip to the bank and reduce time-consuming paperwork reconciliation at the end of each month with this common provider-based service.

Benefiting from the knowledge of an expert - It can be hard to stay on top of changing regulations, forms and withholding rates. A payroll expert comes with institutional knowledge that you can rely on.

 

When is the Right Time to Outsource Payroll?

It could become obvious one day that the time is right. But if you're not sure, ask yourself these questions:

  • Are you missing payroll deposit deadlines? If your payroll tax deposits aren't timely, late deposit penalties can be as high as 10 percent.
  • Are you unsure about your payroll tax calculations? Your errors can be held against you, and penalties can be assessed.
  • Too many employees? If you have fewer than 20 employees it's likely that you can save money by outsourcing payroll. Do the math by comparing the hours/cost of your current system and comparing it to the plans offered by a shortlist of service providers.

Know Your Payroll Tax Responsibilities as an Employer

If you do outsource your payroll, it's important to understand your tax responsibilities as an employer. For example, you are ultimately responsible for the deposit and payment of federal tax liabilities, not the payroll service provider. Failure to make the tax payments will result in the IRSholding you liable for taxes, penalties and interest due. 

Off-Site Business Services, Inc.
Grow A Successful Business!
 
Kim ShannonKimberly Shannon
President
877-966-4441
 
 

 

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