Let’s take a look at some accounting tips that you can apply in your business this year. Remember, that these tips are applicable to U.S.-based accounting.
- Make sure your payments documentation is organized.
This is especially important during adjustment periods, when new tax laws have been passed. Keeping track of information will be extremely helpful when you are trying to analyze deductions.
For example, according to the latest U.S. tax reform bill, every source of qualified business income will have to be calculated and accounted for independently. Small details will make a big difference. This is why you should have all of your information organized.
- Reconcile your bank, loan, and financial accounts.
As an entrepreneur, the last thing you probably want to do is paperwork. However, if you want your business to be successful, you have to reconcile your records and keep track of your taxable income.
- Organize your funding.
The majority of small businesses fail due to a lack of capital or financing for ongoing operations. Besides knowing how to get a tax extension, you must also make sure that your business has enough funding and capital to continue to grow and develop.
If you have accepted Bitcoin or other cryptocurrencies to get a competitive edge, don’t forget that the IRS treats it as property, not currency. So you might actually owe taxes on the cryptocurrency you accepted as payment or that you used to build your business.
You can also consider options like crowdfunding or getting an SBA loan. In any case, it’s advisable to consult with your accountant or finance professional before you do so.
- Get a federal and state tax ID.
Every business should obtain a federal ID number, which enables you and your business to open bank accounts and credit card accounts. Otherwise, not having the proper documentation will become an unnecessary obstacle. This ID number is also necessary for you when it comes time to pay taxes.
- Adjustment – the process of adapting or becoming used to a new situation
- To keep track of – keep fully aware of or informed about; monitor
- Reconcile – make one account consistent with another
- IRS – the Internal Revenue Service is a bureau of the Department of Treasury that is tasked with the enforcement of income tax laws and oversees the collection of federal income taxes
- Crowdfunding – the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet
- SBA loan – The US Small Business Administration Loan that is designed to provide financing for the purchase of fixed assets
- Obstacle – barrier; a thing that blocks one’s way or hinders progress
Questions for Discussion
- What do you think is the most important tip discussed in the article?
- As an entrepreneur, would you accept cryptocurrencies as payment or investment?
- What do you think is the most difficult part of business accounting?