When it comes to running a business or investing, one thing you don’t want to do is be unorganized and unprepared for tax season.
If you are a barber, beauty or esthetics business as well as any other entrepreneur then these 5 steps are for you!
1. Get your books set up: You want to do this even before you open up your shop/business. The good news is that if you haven’t already, you can start now (Better late than never right?)! Once you start and get on track then circle back to take care of past tracking. Make it routine and simple.
2.Create a balance sheet: You don’t need to purchase an expensive accounting software or hire a financial planner or even use a spreadsheet if you aren’t versed in Excel. You can just get a notebook where you document all the finances that pertain to your business. The idea here is to keep accurate records of everything. If COVID19 taught us anything, it taught us that we need to have our accounting in order to receive financial help or get approved for any business loans and grants. This is key! Here are a list of Apps that help take a lot of the guess work out of documentation process.
3.Keep track of receipts: Especially when you accept cash! Purchase an expandable file folder, grab an envelope or go digital (see list of Apps above) or just take a photo of them from your smartphone and create a folder for all of your receipt photos or make a notebook where you can staple your physical receipts and record details. If you have a credit card/bank account for your business (you should!) you can even annotate the monthly bank statements and keep them in the same place as your receipts. Just make sure to keep that paper trail!
4. Keep your business and personal accounts separate: This is something you want to do so that your business credit doesn’t affect your personal credit. Opening a separate business account allows you to easily keep track of your business expenses and income. You’ll be able to apply for business loans and open up a line of credit to build up your business credit. It will make filing taxes way more seamless as well.
5. Set a plan and stick to it: We all want to make money, but when it comes to running your own business you want to keep track of things on a consistent basis. It could be weekly, monthy or bi-monthly depending on the size of your client base. Keeping things up to date will require a lot less time to manage the money coming into your business.
By sticking to these 5 steps, filing your business taxes will be a smooth and less stressful process.
