Business 101: Keeping Track of Banks Statements and Taxes

Businesses big or small fail for many reasons. Lack of sales and client development is one. They can also go belly-up through poor management and lack of productivity. Those are only secondary causes. The primary reason companies fail is they don’t know their bottom line.

The common cause of business failures in their first year of operation is incomplete data on their working capital. This results in the inability to pay bills and, soon enough, calls from creditors. To stop this, here are the basics to keep track of bank statements and taxes.

Let Someone Else Do It

Business owners can’t do everything. If they do, then a step is bound to be missed. In the challenge to build a client base, they’ll bypass a regular review of their bank statements and quarterly taxes. When they have time to review the information, they’ll discover how much trouble they’re in.

Whether or not they want to, business owners must invest in an accountant or accounting firm to keep track of finances. They don’t have to be on the premises. The accountant can work remotely as long as they have access to financial records.

In the end, it doesn’t matter where they are. What does matter is someone else keeps track of working capital and necessary expenses. Plus, with the information they have, they can file quarterly or annual taxes.

Purchase The Necessary Software

If a business owner insists on handling their own accounting, then it shouldn’t be done the old way. Paper ledgers and calculators cause numerous problems. For instance, incorrect record entries that lead to audits.

The solution is accounting software. There are several titles on the market that make it easier for businesses to keep track of bank statements and taxes. In fact, modern financial packages are able to directly link into banks to receive the most recent statement data. Thus, no need to manually reconcile transactions.

Open A Business Account

A mistake made by small business owners is putting personal and business income into one account. Unless transactions are meticulously tracked, what’s related to the company is hard to determine. This leads to problems greater than simple confusion. For instance, it could lead to an IRS audit.

The creation of a separate business account helps to track income and expenses for the company as opposed to personal funds. This simplifies the accounting for taxes. In addition, it stops the business owner from going to an IRS Tax Lien Removal company. If they have to visit a place like the Enterprise Consulting Group, it means the government placed a legal claim on the business’ property.

Set A Regular Review Time

Business owners try not to put out the daily fires related to employees and clients. Yet, it seems to be a place they land. By the end of the day, they’re not in any mood to do anything, and that includes checking their finances.

This is why a specific time needs to be set each week for a review by the business owner or in combination with the accountant. This is the main way to check for any discrepancies as well as prepare for tax payments. No matter the figurative fire, this a period where interruptions have to be kept to a minimum.

Go Paperless

Despite the security around digital records, some business owners still rely on paper copies. The amount of material a company generates related to bank statements, invoices, and receipts takes up a large amount of office space. Plus, there’s bound to be a piece of paper that accidentally gets thrown out or falls behind a file cabinet.

This is prevented with a move to paperless records. Banks, credit card companies, and even the IRS tend to work more with digital information than printed output. Among the benefits is easy access to records and retrieval of past information when a paper copy is lost.

Business owners save a great deal of frustration and money when they diligently track their bank statements and taxes. The suggestions mentioned are just a few ways the process can be done with little effort and expense. With the proper follow-through, business owners will thrive where other companies fail. Thus, take these suggestions seriously.