Seven Financial Habits That Drive Your Bookkeeper Crazy
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Bookkeeping can be confusing for a new business owner. If that’s you, you might decide to get a bookkeeper to handle your books for you.
Here are 7 things not to do if you want to stay on your bookkeeper’s good side.
1. Mix Your Business and Your Personal Bank Accounts
Mixing your accounts can easily triple the time your bookkeeper needs to spend on your case. It’s tedious work, and there’s a lot of guessing involved so chances are your accounts won’t be 100% accurate. Set up a separate bank account, credit card, and PayPal to use for your business exclusively.
2. Throw Away Your Receipts
Keep those receipts and file them by month. Your bookkeeper needs them to separate out the sales tax and categorize the expense. You might think the bank or credit card statement is enough, but without the receipt your bookkeeper is mostly guessing. Oh, and it won’t stand up in an audit, so you expenses could get reversed.
3. Fail To Track Your Mileage
Unless you don’t want the tax deduction, of course. Your government might let you do an estimate, but get the full details before you retire your log book.
Get a free mileage log here.
4. Pay Your Bills Late
Not only are you paying a late fee or interest, but your bookkeeper has to make an extra entry for the late fee. Save the hassle and pay the bills when they’re due.
5. Throw Away Your Previous Tax Returns
If you don’t have your previous tax return, your bookkeeper might have to set up your accounts from scratch. Not only is that time consuming, but if you have a big swing in spending one year you could get flagged to be audited. Keep your tax returns to reduce the chance you’ll get a visit from the auditor.
6. Don’t Save Money for Taxes
When you own a business, you have the luxury of paying your taxes at the end of the year. You have the option of investing that money in the meantime, but make sure you have access to it (and haven’t spent it) come tax time. The interest on late tax payments can be costly.
The percentage of your income that you should save varies by region, but 30 to 40% is generally safe.
7. Leave Your Bookkeeping to the Last Minute
Bookkeepers and accountants are swamped at tax time. Too many people leave their bookkeeping to the very last minute, and then they wind up either overpaying to get it done in a hurry, or they’re out of luck because all of the bookkeepers are too busy. If this is you, give your bookkeeper a break and get your bookkeeping done monthly or at least well before tax time.
If you stay away from these 7 bad habits, your bookkeeper will thank you when the time comes. You can also sleep easy because you have all the documentation you need for the government.
Don’t forget to download your free mileage log here.