If you are in business, then guess what you are either an
accountant by default or you need to hire one. Why? People ask
that question while letting the year roll by until taxes come
due. Oh no! Why do I have penalties?
Simple, you are not an accountant and you should have hired on.
So the first rule of business accounting is to hire one if you
are not one. Second rule of business accounting is to hire an
accountant to review your accounting before filing taxes.
Most individuals starting a business are unaware that the
filing deadlines for corporations and small businesses are
different from personal filings. While personal income tax
returns are due in April. Corporate and business tax returns are
due in March. His often leads to many late fees and so forth
associated with late filing penalties.
Keeping good records is another concern for most new business
owners starting out. Many new business owners do not understand
the tax code and do not understand what can be written off as an
expense and what cannot be written off as an expense. These
small errors will also lead to penalties and additional fees
associated with your filings.
Make sure to keep all receipts or online order forms for later
reference and keep them organized. There is nothing worse than
the end of the year sorting festival. Receipts get lost and
records can be incomplete if not taken seriously. Do under
estimate the power of organization and the process of organizing
your records. Keep them tight!
Giving to charity must also be carefully monitored and accounted
for by both parties. The philanthropist and the charity should
both get a receipt and have good records. If you give time then
keep good logs of your time and have the charity you donate to
accept and sign for your log. You need a receipt!
Warning! Take great care not to fabricate or provide false
deduction information. If you claim a deduction make sure your
records are in order and you are prepared to be questioned if
such questions arise. The practice of over filing expenses with
the federal government and fabrication of records is a federal
offense and can carry legal ramifications beyond penalties and
fines.
In fact you can be imprisoned for fabrication of any information
regarding your taxes. Going to prison for bad record keeping?
Now that is a bad way to end a fiscal year.
Keeping track of money coming in is as much of an issue as
keeping track of money going out. Simple bank statement
preservation can go a long way to keeping things on track for
your new business. Keep them in a "safe" place preferably a fire
proof safe if possible. Remember all the responsibility rests
squarely on your shoulders no on else's. The federal government
does not care if your building burns to the ground before the
tax year is over. You are still responsible for your taxes and
the ramifications for not filing can be expensive ones.
Good accounting software should be your first stop if you plan
to keep you own
accounting records.
There are several packages out there some are expensive and some
a cheap. Pick one that meets your needs best not the biggest
just because it appears to be the most expensive or the one with
the most features. Remember, you have to learn how it works in
order to keep good records. So keep in mind your own personal
limitations when purchasing accounting software.
Finally, if you accept cash then document the transaction with
a receipt. Never take cash without a receipt and always claim
your cash receipts at the end of the year. After all, the
greatest Mafia bosses and organized criminals of our time were
not prosecuted for murder or the other hideous crimes they were
in charge of. They were imprisoned for not filing taxes on cash
receipts.
A good accountant can help you to avoid penalties and over
taxation. Hire one they are worth every penny in the long run.
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