January is over – so are most of your New Year’s resolutions. It’s ok, it happens. Now that you’ve shed those fantasies you resolved to accomplish during a holiday season full of too much food, too much drink and far too much celebrating, you can focus on actually making changes that stick. When it comes to your business, the best change you can make this year is creating an ecosystem that improves the pain of preparing your small business taxes when 2020 closes.
This year, set yourself up for success by improving your bookkeeping.
Improving Bookkeeping Habits
Bookkeeping can be tedious when you’ve got a lot of receipts, several subcontractors and other random bills to pay, but it doesn’t have to be chaotic. Designing a bookkeeping system that helps you stay organized is the key and, unless you’re the rare contractor who has way more work in the winter than the rest of the year, now is the time for it.
Tracking all the bits of paper and transactions that you handle during the week is the foundation of bookkeeping for contractors. That’s why it’s so important to have a system for receipt entry, storage, and retrieval. When it comes time to file your taxes, you’ll have all those expenses at your fingertips, rather than having to sort through a bucket or box of paper slips you’ve accumulated all year.
Make sure you devote at least one day a week to handling your bookkeeping, that way you don’t get overwhelmed by it all. Once a week might demand an hour of your time, rather than the hours or days of painful work in one go.
Using a software package that allows you to categorize income and expenses, as well as preserving an image of the actual original receipts and invoices can be game-changing. Scan those images in religiously, categorize them immediately and file them away in case the IRS shows up wanting to see your originals.
Breaking Out the Tech
Beyond the bookkeeping software, there are lots of tools to help you track the pieces of information that will be required for your business throughout the year. For example, mileage tracking apps are abundant and they’re easy to use on a smartphone, giving accurate mileage reports based on GPS data. Many are designed to not only be used by you, as a business owner, but also for your employees or contractors who may require mileage reimbursements.
A few recommended apps that handle mileage tracking and more:
Everlance. Not only does it stop and start automatically as your car moves, allowing you to categorize each leg of your trip as personal or business, but it can also keep track of business expenses and images of receipts, too, to help you get into a great bookkeeping habit this year.
Stride. It’s all about car-related expenses, from those miles to things like car washes, parking fees, and tolls. When it’s time for taxes, it’ll generate an IRS-friendly report you can then take to your accountant or use to prepare your own return.
Hurdlr. Do you want a more real-time picture of where you are with your mileage and expenses? Hurdlr might be the answer. It can link to your bank account, track your mileage automatically and is available on both Android and iOS, so there’s no excuse to not be up to date on your mileage and expense reports.
What changes have you made to your bookkeeping practices to make it easier to swallow? Let’s talk preparing for tax season all year long in the comments!