Small business finance ABCs: Bookkeeping
When it comes to managing your finances, you may tend to focus, as most of us do, on one number: the current balance of your checking account. It's either positive, meaning you have money, or it isn't, meaning you need to call your bank right now!
For your business, you need to exercise a little more control over, and diligence with, your company's finances. This can help you quite a bit, saving you both time and money, in the long run, greatly offsetting the cost of professional bookkeeping.
As your bookkeeper, I'll provide three main sets of services:
- Producing financial reports As your business grows, investors, creditors, and government agencies, including the IRS, will want to know the financial status of your company. This means more than showing them your bank account balance. Having accurate books means I can quickly produce profit and loss, cash flow, and balance sheet statements. I'll also send you these reports, along with my analysis and recommendations, regularly if you want so you always know where your business stands financially.
- Simplifying tax preparation Tax time always seems to come around before we realize it, and corporate tax returns are due a month earlier than individual tax returns! This means you need to quickly be able to convert information about your company's operations and financial position into tax-relevant information, such as deductible expenses. Also, because you have a "pass through entity," the company's net income becomes part of your personal net income, which affects your individual tax return; therefore, you really want me making sure the business's taxes are handled accurately in order to get you the best treatment on your personal tax return.
- Running payroll You're an owner of your company, but you are also one of its employees, and employees make wages.
- When your company pays wages, it needs to withhold a portion to cover your income taxes as well as your payments into FICA (Social Security and Medicare); on top of that, the business matches your FICA contributions as well. Not paying into FICA and not withholding your income taxes will get you into trouble with the IRS, leading to additional penalties and potentially an audit. (The IRS may even force you to pay additional taxes on what you already paid!) I can help prevent all that from happening by managing your company payroll.
- As your business expands and you add more employees, I can quickly set them up with payroll as well.
- In the meantime, if you're paying independent contractors, you can deduct those payments as business expenses, but only if you get the paperwork right, and that's part of the payroll process as well.
- Employees also get benefits as part of their compensation, and you shouldn't be an exception. I can set you up with necessary insurance (health, life, and disability) through the business, getting you better rates and saving you from the hassle. (I’d hold off on any retirement saving until you two clean out your debts, but once that happens, I can set up a company retirement plan as well that will get you and the business tax advantages.)
- All of this—wages paid, payroll taxes collected, payments to independent contractors, benefits provided by the company—has to be reported to the IRS. I'll handle all of that.
As your bookkeeper, I'll take care of all of these things accurately and efficiently so that you won't need to worry about them. You'll spend more time running your business and living your life while I take care of the details.