As tax day approaches, businesses around the country will be turning their books over for tax preparation. Some will be well prepared but most small business owners may get “that sinking feeling,” hoping that their accountants can help piece things together. With a little foresight and some planning, however, small business owners can easily adopt smart bookkeeping practices that will make tax time much less stressful and their bottom lines more robust.
“The key is in the set-up,” says Paul Stappas, owner of Bookkeeping Administration Management, a service that implements bookkeeping systems for small-sized companies around the country. “Most businesses use Quick Books. But if the entries are faulty, Quick Books won’t produce accurate profit and loss statements and balance sheets. The adage, ‘garbage in, garbage out’ definitely applies.” Amazingly, of the thousands of businesses Stappas has counseled, less than two percent were using Quick Books to its potential. Stappas says he has also found inconsistencies and incorrect data from every company that has requested his help.
Here are tips Stappas says business owners should follow to maximize their accounting efforts and make tax time as painless as possible whether they use Quick Books or not:
• A bookkeeper should never make adjustments to your books entry system without specific authority from you or your accountant. Stappas says that most company bookkeepers will frequently make adjustments to their books and never inform the owner or the owners’ accounting firm. The way information is entered into Quick Books or another program will definitely affect the outcome. If the entry system is changed, you may not get accurate profit-and-loss statements or balance sheet at year’s end.
• Make certain your entries are recorded accurately. Even simple entries can be incorrect if they are not logged properly. The interest and principal on a car loan
payment, for example, must be separated for proper accounting purposes. For manufacturing firms, the cost of goods must be properly logged. Service companies must properly record hours worked by each employee. Liabilities are frequently not recorded correctly, resulting in improper payments to the IRS.
• Spend time planning for the year ahead. Even if your books are not up-to-par this year, don’t hide from the problem. Spend some real time now to correct your books, implementing new entry systems if necessary and resolve to stop the bad habits that can put unnecessary stress on even successful businesses and their owners.
• Hire an expert to fix the problem. Bookkeepers might not have the training necessary to correct inconsistent and inaccurate entries. And, accountants might not have the time budgeted to overhaul your books. Find a true Quick Books expert who knows business to repair the damage.
It’s never too late to start over where bookkeeping is concerned. “If your systems seem substandard, don’t despair,” says Stappas. “With a few simple changes, any company can adopt end-of-year bookkeeping and accounting practices that are easy to follow and accurate to a fault.”
Bookkeeping Administration Management is a turn-key bookkeeping service that handles monthly or semi-monthly accounts receivables, accounts payable and payroll needs for businesses of any size. The company is based in Neshanic Station, New Jersey. For more information visit: www.bookkeepingadmin.com
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