Accounting For Your Finances Will Take Time

Accounting For Your Finances Will Take Time
Copyright © Jose Love

No matter what type of business you are in,

accounting for income and expenses will become a

primary need you will have to face. Even if you

fail miserably and have no income, you will need to

account to the state and federal tax authorities.

While prior to the electronic age, books were

maintained by hand, usually a 13-column ledger that

helped business owners keep track of expenses and

income, accounting software is now available to

help keep track of your business, and personal

finances.

Some of the accounting software on the market today

may require extensive experience to use, or at

least a lot of time to sit with the user’s guide to

understand how it works. However, there is also

software that is self-explanatory on a basic level

that can be used to help track expenses and income

while writing checks for supplies and, if

applicable, payroll and office expenses.

Some of the better business software can cost

upwards of $300, but is well worth the expense if

you feel your business is going to take off and

plan to have multiple clients and multiple income

streams. It can provide a detailed profit and loss

statement that can also be used to calculate income

and business tax liability. For most small

businesses just getting underway, hiring an

accountant may be financially out of the question

but having decent accounting software can make

keeping track of your finances easier.

It will not matter the quality of your accounting

program if records are not updated on a daily

basis. It may be easy to say that since there were

no expenses or receipts paid that day there is no

need to open the software and make any entries.

Think again. If you are ever tagged for an Internal

Revenue Service audit, any open dates may be seen

as an attempt to hide something. Simply noting that

there was no activity on a particular day into the

accounting software may save a lot of questions

later on.

It is also easy to say you will do everything once

a week and while this is acceptable, when you are

just starting out, getting into the habit of making

daily entries will insure nothing is missed.

Receipts and check records should also be

maintained on a daily basis and at the end of every

month, when reconciling your checkbook, verify the

receipts are available for every expense. Lost

receipts are the biggest cause of paying more taxes

later, because you can’t prove where the money

went.

Even if you use a simple spreadsheet to track

expenses and income, any type of hard accounting

history will help keep you on track and let you

know where you stand where your business plan is

concerned. If accounting shows your income is

running higher than expected, it is time to

celebrate. If lower than anticipated, you will need

to make adjustments in expenses to keep the bottom

line on track.
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