As the year comes to an end, the next tax season is around the corner. Now is the perfect time to being organizing your accounting for 2018 and creating strategies to do so in 2019.
Very often we are inclined to wait till tax time to being organizing and compiling accounting records. Here are 5 reasons you should not wait till tax time to organize your accounting—
To capture all expenses throughout the year accurately
Waiting till the last minute to compile receipts and expenses increases the chance of errors and missing expenses that should have been captured as part of the cost of running your business. To capture expenses through the year, open a bank account solely for your business and pay business related expenses using that account. Also make use of apps like Expensify, and Receipt Bank to keep track of receipts and what categories they belong to.
Identify high spending categories
By keeping track of expenses through the year, you’ll be able to identify what your high spending categories are and if you are overspending. This brings us to my next point…
Better Cash flow management
Staying up to date with accounting records will give you a clearer picture of what your expenses and revenues streams are and their frequency. You can factor your estimated tax burden into your expenses throughout the year. This way you can plan ahead and avoid surprises that can put a burden on your business.
Reducing Anxiety and stress around Tax time
Let’s be honest, as Creative entrepreneurs, filing our taxes comes with a lot of anxiety and stress. Keeping organized accounting records year-round can help reduce this stress. And even better, when you use an accounting software like Xero, you can easily export reports needed and send them to your CPA. Pain free!
You can focus on the parts of your business you are passionate about
Keeping your accounting records organized through the year, will allow you to focus on growing your business. With an experienced accountant in your corner you will not only be stress free during tax time, you will be able to use your records collected through the year to make informed decisions in your business and make better forecasts in revenues and expenses for the coming year.