Tax Bookkeeping essentials for you and your company
When it comes to handling the finances of a company, keeping the books organized is more than desirable for maintaining a smooth day-to-day operation. To do that, you should familiarise yourself with the basics of accounting and it is crucial to ask questions when you don’t know the answer. To help you and your business in these matters, we composed a guide with all the bookkeeping essentials.
What is tax bookkeeping? And what is the difference between a bookkeeper and an accountant?
Tax accounting (also known as tax bookkeeping) is based on tax returns and expenditures rather than public financial statement planning. It is a subsector of accounting that is responsible for processing tax returns and tax payments.
Although accounting and bookkeeping are synonyms of each other, there are certain countries where there is a difference in meaning between them.
A bookkeeper is a financial expert whose job is to maintain the financial accountsfor a company. A bookkeeper is usually responsible for properly tracking transactions, including accounts receivable and payable, inventory, payroll, and presenting monthly, quarterly, and yearly reports about the finances.
Accountants are fundamentally bookkeepers but on a different level. They generally prepare detailed financial reports, conduct audits, and carry out tax return proceedings.
In general, every business needs someone to keep track of their accounts and books. Whether you choose an accountant or a bookkeeper you have to have someone to help you review your financial reports and to aid you in making tax-related decisions.
Five bookkeeping best-practices for your company
How does tax bookkeeping work and why does it matter to do it properly? Tax bookkeeping comes into a company’s financial picture when the need arises to execute complex fiscal operations regarding how funds are spent and to determine what or what is not taxable. Tax bookkeeping works differently in every country but it is usually determined by the following factors:
- Your company’s sales and incomes.
- Your company’s expenses.
- Your VAT transactions.
- Your other expenses regarding your employees.
As you can see, proper bookkeeping and accounting have many variables and it can be an overwhelming task. Keeping track of your earnings and expenditures, holding on receipts and inquiring your invoices are all part of the bookkeeping business. Fortunately, there are many possible courses of action and best practices for your bookkeeping operation, which can help you to reduce the margin of error in your accounting maneuvers.
Digitalize what you can and invest in an accounting software
When it comes to tax-related matters, the first and probably the best thing you can do to make your job easier is to invest in accounting software. These platforms are designed to keep any accounting-related tasks simple and manageable.
An additional advantage of going digital is that you can keep all of your bookkeeping records in the cloud. Therefore you and your company never have to worry about losing precious data or documents. Automations are another great benefit of going digital. Most of these programs have the ability to sync with your business’ bank account, thereby you can ensure your books are always up to date.
Keep your tax-related records organized and your calendar updated
Clean bookkeeping ensures that the profits and expenses are always coordinated, properly calculated, and in compliance with legislative regulations.
If necessary create checklists to keep track of all of your tax-related essentials, including tax forms and reports. Prepare ahead and set aside a portion of your income to cover your anticipated tax payments. Avoid fines from the state by keeping a frequently updated tax calendar with important deadlines.
Know the essentials: invoices and receipts
One of the most common mistakes, especially in small businesses that they tend to tumble up receipts and invoices. As we all know knowledge is an important resource as any. Knowing the difference between these terms can spare you and your accountant some headaches.
An invoice is a type of check sent to your clients after they have used or received your services. In this bill, your customers can see in detail, what services your company has provided for them. It is also a reminder to them that they are under the obligation to pay you.
A receipt is a document that proves that a transaction between you and your client has happened.
Knowing the difference between them and using these documents properly are essential for not mixing up what payments are ongoing and what is completed.
Find the time in your schedule to tend business’ bookkeeping needs
It doesn’t matter how fancy your bookkeeping software is, or how well-organized you are if you can’t (or don’t want to) find the necessary time in your schedule for your bookkeeping practices. Instead of doing your company’s accounting whenever you get around, you should set aside some time every day, week or month depending on the size of your business. Frequent reviews, schedules, and planning are key to maintain the order in your finances.
Hire an expert
One of the most effective ways to handle your company’s taxing and accounting related matters is to outsource it to a professional. It is true that by doing your own finances you can save money. But what if you make an error in your calculations? Or you forgot to pay a bill or failed to keep a deadline? By hiring someone with proficient accounting expertise you can easily eliminate all the unnecessary complications. Ultimately, with an expert at your disposal, you can easily plan your expenses and can focus your attention on more pressing matters.
Conclusion
If doing your books takes away most of your time, or you are not sure what form of documentation you should fill out and in what order, you are definitely in need of someone with professional bookkeeping expertise.
With the help of a bookkeeper specialist you can essentially save money and time, accurate your financial record keeping, and gain compliance in your monetary instances.