All Successful Vancouver Businesses Use A Bookkeeper: Here’s Why!
While you may want to maintain separate checkbooks so as to comply with the bookkeeping rules and avoid potential lawsuits, there are numerous other reasons why you should separate corporate revenues and spending from personal ones. Therefore, keep reading and get to understand these reasons especially if you are a business owner.
Maintaining different checkbooks for your business helps prove that your corporation is a distinct entity from the shareholders. After all, this is the fundamental reason why we form companies. By setting separate books, you also protect the shareholders from liabilities that arise from the corporation by treating it as a separate legal person. Separate checkbooks also help avoid mingling up personal funds with those of the business.
Separate accounting books help you to keep track of all activities that affect your bookkeeping. Intermingling your accounts raise chances of misstating the values in your checkbook which consequently influence the cost of the tax returns. The best way to avoid incurring costs from tax returns is by maintaining separate checkbooks which help provide better and more efficient records.
Other than staying protected from high costs of tax returns, you can be sure of passing the IRS audit by maintaining separate checkbooks. The reason behind this is that with separate checkbooks, you decrease the possibility of having the IRS reject the some of the expenses included when you mix both personal and business expenses.
It is no doubt that by combining both personal and business finances, you will have disorganized books that can induce a lot of stress. You will fail to know how to account some of the expenses as chances of confusing personal to business expenses remain high. By maintaining separate books of account, you can be sure to relieve the stress resulting from poor records. This is because updating such books is quite simpler, unlike combined records. Besides, you can rest assured to save a lot of time and money in the long run as you won’t have to deal with business problems regularly.
Improved decision making
Let’s face it. You cannot make precise and attainable goals and decisions if you already have inaccurate records today. Moreover, you cannot expect to account for money that is unavailable but seems available from your files. By maintaining consolidated accounts, you raise the risk of spending more that your what your business budget can withstand as you might end up planning for cash that isn’t available for business spending, only to find later that your records were wrong. With separate checkbooks, you can be sure to always make informed decisions due to the existence of accurate records. Accounting Firms are crucial to any successful business whom want to be able to make their own decision making while entering in expenses and handling taxes correctly.
Now that it is evident why maintaining separate checkbooks is ideal for your business let’s have a discussion on some of the options at your disposal to enable you to implement an income and expense tracking system.
Input items yourself
Delegating all tasks involved in your bookkeeping isn’t always an appropriate measure to take. You need to take some few hours of your time and learn the basics associated inputting figures. This can help you stay on track with most of the records if not all.
Hire a family member to help keep track of the books
When you consider yourself busy to handle both the business management as well as your financial records, you should consider getting services from your family. After all, this is a great measure to equip young adults with skills for use in their future careers, not to mention that adding such members to the payroll is an excellent method for a tax write-off.
Engage a local bookkeeper
Another way by which you can implement your income and expense tracking is by involving the services of a college intern. By such a measure, you can save up much of your time hence leaving enough time to handle more pressing issues or make more incomes.
Hire someone in-house
Do not underestimate the services of those within your organization especially college students. These persons are always willing to work on a part-time or full-time basis for a wage. You can have such individuals attend to your incomes and expenses records based on the required schedule and be sure to have accurate reports.
Use your CPA or tax professional
A certified professional accountant is another option at your disposal. While taking this option may seem costly considering the fee you will be entitled to pay, you can be sure to save much in the long run as chances of poor records will not be a concern.
For the above reasons, it is no doubt that every business owner needs to take the rule of separate bookkeeping very seriously for a successful business. Also, the tips provided above can help you stay on track with this rule.