If ever there was a year that spotlighted the need for keeping clean books and records, 2020 is it. What began as an action packed, booming economy, quickly nose-dived when all across the country, stay at home orders forced many businesses to close or pivot to significantly different ways to provide their goods or services. From online and virtual based platforms, to pop up outdoor dining, business owners everywhere scrambled to evaluate their finances utilizing varying degrees of properly kept books. Tough decisions had to be made, highlighting the importance of accurate bookkeeping.
As the tumultuous year draws to a close, the reality of the unavoidable looms for all of us: Taxes. While 2020 provided all of us with a much different outcome than our business plans could ever have imagined, the need for accurate bookkeeping only became more important. After such a rollercoaster ride, where do small business owners start and what steps should you be taking to prepare your records? Ultimately, the basics of organizing your records for tax time stay the same: Accuracy, documentation, and thoroughness will prevail.
Unfortunately, for most small business owners handling their own books, many important tasks are also the most tedious. Data entry and organization of documentation often gets overlooked or set aside in favor of the more pressing day to day business operations. Eventually this creates a major backlog of bookkeeping. With tax time lurking around the corner, let’s take a look at the key areas to focus on to get you where you need to be.
It is important to remember that while there are many components to well-kept records, there are key best practices, that are often overlooked.
Preparing for taxes can be highly stressful, but with some good practices in place, it is a process that can be easily streamlined. Partnering with a bookkeeping firm to maintain your books in real time will not only allow you to experience tax season with ease, but will also provide you with a knowledgeable partner that can help develop the systems that work best for your situation - ensuring that your financial records are always updated.
If 2020 taught us anything, it was that sometimes in life we have to make difficult business decisions without warning. Treating your bookkeeping as if each month is year-end provides you with real-time, accurate information, critical to decision making because you cannot make good decisions with bad books.
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