While you are focusing on critical business activities such as production, marketing, and customer service, keeping track of your budgets, receipts, and financial reports is probably the last thing on your mind. However, these full-service accounting tasks actually contribute a lot to your business growth and success.
Choose The Best Accounting Method For Your Business
There are two standard accounting strategies: accrual basis accounting and cash basis accounting. Both methods allow businesses to keep a track of expenses and gain insight from reports. However, there are some key differences you must consider before choosing a full-service accounting method that is best for you.
1. Accrual Accounting
The accrual accounting method acknowledges expenses and revenue as they are billed and earned. If your business invoices customers instead of recording payments at the time of service, this method will make most sense for you. Please note that while you can change the full-service accounting method anytime, you will need to undergo a lengthy process with the Internal Revenue Service (IRS) to do so.
2. Cash Accounting
In the cash accounting method, expenses and revenue are recognized as they happen. When you make money, the balance in your bank account increases, and when you spend money, it is deducted from your account. As you can imagine, this strategy provides you a precise picture of your account, but it doesn’t consider the expenses that will be billed to you in the future, not the money that is coming your way.
3. Track Expenses And Stay Organized
If you do not want the IRS to hit you with an audit, track your business revenue and expenditures accurately and in an organized manner. Make sure your CPA or the remote full-service accounting team is following the same procedures. This will help you locate and understand the records easily whenever you need to access them.
Remember, if the tax amount is more than 25% of your business’ gross income, the IRS can perform an audit up to 6 years after filing. This is why businesses should maintain their business records (both physically and digitally) for at least seven years.
Keep Your Business And Personal Expenses Separate
If you are a small business owner, your work most likely has a tendency to seep into your personal life. But this line between life and work should not be blurred when it comes to your finances. For example, you should never use your business credit card for personal expenses or vice versa, if you want to maintain compliance with business regulatory standards and the IRS.
Our Remote Full-Service Accounting Team is Here to Help
Small business accounting may seem complicated at times, but with helpful resources on your side and the right strategy in place, you can manage your books more efficiently and maximize your profits.
At Remote Accounting Online, we understand that not all business owners have the desire or time to spend time entering data or crunch the numbers. This is where we come in. We can help you set up your accounting strategy and manage it on your behalf so you don’t have to.
We are a full-service accounting firm and offer monthly bookkeeping, payroll processing, business bank account and credit card management, tax accounting, and more. If you have any questions or you’d like to talk to one of our experts today, please call us at 541-772-5555 or contact us online.