Business Accounting a Mess? How to Get Back on Track
According to the IRS, almost 90% of taxpayers pay a professional or use software to file their taxes.
If you’ve been doing business taxes on your own, you know how complicated the process can be.
In fact, you could be struggling to grow your business because it has become a financial liability.
You might be aware that your business accounting is a mess but not be motivated to fix it because you’ve just accepted that’s how it is, you think it’s too expensive to fix, or you don’t realize the negative outcomes it can have on your company.
Is your business accounting a mess? It can cost you money and time, and cause your overall business to suffer even if you don’t know it.
Let’s change that.
Get serious about fixing the mess by learning what to do.
Keep reading as we dive into the steps.
Implement the Proper Setup
Many businesses have a bookkeeping mess because they never took the time to set up their accounting system correctly.
When you are off from the beginning, you can only get worse over time, not better.
The first step to getting on the right track is proper setup.
This might mean that you have to start all over.
It doesn’t sound like the easiest fix, but if your accounting system doesn’t have a strong foundation, it will continue to be a mess.
The time it takes to start completely over will be worth it in the long run.
Search for a new system that can help your business reach its goals and start rebuilding transactions from there.
Choose the Right Tools
These days, proper bookkeeping is not done manually.
You need accounting software for easy transaction documentation.
Complete research on the different accounting systems available.
Choose the one that you are most comfortable with and that works well with the CRM system you use.
If you don’t intend to handle the accounting process yourself, consider outsourcing to full-service bookkeeping companies.
Hiring an accountant who can show you what tools you should be using is the key to success.
Reconcile Accounts
Once you have the proper accounting software set up with your bank accounts integrated into the system, you need to create a chart of accounts.
A chart of accounts is a method of organizing records involving booking transactions in the proper areas.
Reconcile your transactions by categorizing them into the corresponding revenue accounts and invoices.
This will keep your financials up to date.
You might already be using some form of these files, so an accountant can go in and clean up the data by performing reconciliations.
They can also build files from scratch by customizing the chart of accounts to your industry and tax structure.
When you pay a bill, place it in the expense account and add the correct receipt with it.
When a client pays their invoice, place it in the revenue account.
Bank reconciliations require discipline.
Do this after every transaction so they don’t start to pile up.
When you regularly reconcile, you have real-time financial reports and data that are helpful to growing your business.
You’ll also have everything you need to prepare your books for tax season.
When you outsource a professional accounting firm, you are also benefitting from necessary business tax services.
After your general ledger is in order, a business accountant can implement a monthly closing routine to ensure that you are continuing to reconcile accounts.
Separate Business and Personal Expenses
A big no-no in the business accounting world is having one bank account or credit card for your business and personal expenses.
Without separating this information, you may come across unpleasant tax implications.
There are deductible business expenses you’ll want to claim through the IRS at the end of the year, but you can’t do this when your business and personal finances are jumbled together.
If you find that your business accounting is a mess, this might be one of the main reasons.
The best accountants will recognize this and immediately work to fix the spiral.
Not only do you get liability protection when you separate your business and personal finances, but you reap these benefits as well:
- Building business credit
- Streamlining accounting
- Better recordkeeping
- Relevant account features
To separate your finances, open a business bank account and consider the services you might need if your business grows in the future.
Another great way to separate expenses is by applying for a business credit card.
Prevent Future Messes
Accounting services can help your business get back on track through proper bookkeeping, organization, and advice on business taxes.
However, professionals offer more services than cleaning up your financial mess.
They can continue working with your business to prevent future messes from occurring.
After you go through the cleanup process, you won’t want to do it again.
If you fall behind again, you risk losing your business altogether.
A more common outcome would be getting audited by the IRS.
Audits will halt your business growth because you’ll have to take your attention away from business operations to find and provide the appropriate documents to the IRS.
If you are behind on your records, this is only going to take longer and might even prove to be impossible if you have lost your records.
Providing accurate information to the IRS can prevent an audit.
The only way to do this is to ensure you are handling your accounting process the right way.
Business Accounting a Mess? We’re Here to Help
If your business accounting is a mess, you’ll want to get back on track as soon as possible.
Organizing financial records and setting up a new accounting system are tedious tasks that you might not have time for.
To prevent your business from suffering, these tasks are necessary.
Luckily, Master Accounting and Tax Service is here to help.
You can count on us to help you out of the hole and implement strategies for continuous accounting success.
Don’t wait any longer to get started.
Contact us today to learn more about our financial services.
Need accounting and tax preparation services? At Master Accounting and Tax Service, we specialize in providing top-tier accounting, tax, bookkeeping, and fractional CFO / controller services at an affordable cost and with the utmost integrity. Call (480) 456-4999 or Contact us today!
