Accounting is a very important part of running a business. Apart from managing taxes, it helps with maintaining the finances of the company. Knowing your numbers lets you make informed decisions about business strategies and future moves. You can also judge the health and success of the business through proper financial analysis.
Make Accounting Easy
Another aspect of efficient accounting is gaining investors. Before putting money into your business, the investor would want to view a detailed report of your transactions and taxes. Hence, it is essential to maintain accounting details in depth when you are running a business.
Why Does Accounting Cause Stress and Confusion?
Accounting can be stressful for every organization, irrespective of its size. Firstly, you can be neglectful of this process the whole year while you are busy with other important tasks. Come tax season, all the pending finances hit you together and make your life difficult.
In other cases, you might be unaware of the nitty-gritty of the accounting process and lack the expertise to do it efficiently for maximum tax benefits. Under any circumstances, this whole situation may lead to stress and confusion for business owners and accountants equally if left to the last minute.
In the fast-paced modern world, reducing time and labor from accounting helps a great deal in optimizing your business workflows. No matter how big or small your business is, maintaining payroll and bookkeeping takes up a lot of time in man-hours.
Some of the basic precautions you can take before diving into accounting are:
- Set savings aside
- Invest wisely
- Prepare for budgets
- Organize present and future costs
- Track your business functions
Apart from these, there are several steps you can take to reduce the stress associated with accounting.
Making Accounting Easy and Stress-Free in 2021
The advent of technology has led to the creation of several solutions that can make your accounting process easy and stress-free. These tips work well with both large and mid-range or small organizations. The bigger your organization, the more automation you need to take care of the finances.
Here are five of the easy and stress-free ways in 2021 to make your accounting process as simple as you can.
1. Make Separate Accounts for Business
If you have a combined business and personal account, it can become the biggest source of stress for you during the tax season. Always make a separate account for your business, even if your business is very small.
Separating business expenses from personal transactions will be a tough task if you do not do so. Having a separate account lets you keep records more accurately, without any mix-ups or confusion.
With this arrangement, you can file tax returns efficiently without having to sort through pages of your transaction history. You can also track business expenses easily and perform accurate cash flow management. This also helps if you have to undergo audits as you are complying with the regulatory standards.
You can find free or inexpensive business accounts in banks near you. Like credit cards, you should always get a card in your business’s name and use it for all work transactions. If you end up using a personal card for some reason, make sure you reimburse yourself from the business account and record it.
2. Automate the Payroll System
Payroll is one such business function that needs to be carried out regularly and on time. To uphold the company’s reputation, you must not keep employees waiting for their salary. Thus, payroll processing becomes a big stress factor for business owners.
Automating the payroll process is a highly efficient solution when compared to relying on human resources or unskilled staff. Disorganized or incorrect payroll processing may lead to errors in payment amounts and company-wide confusion.
To prevent that, you must automate the timekeeping process first. This leads to better resolution of salary and payment disputes. You can use payroll automation platforms to optimize this workflow and reduce human intervention.
Instead of spreadsheets and time cards, use this platform as a holistic solution for time and labor. This will also help in filing payroll taxes efficiently.
3. Use a Bookkeeping or Accounting Software
Using bookkeeping or accounting software lets you manage all your company finances on one platform in an automated way, thereby reducing the time and effort required, along with the error margin. This is a smarter and faster solution for tracking business finances.
You can also opt for cloud bookkeeping, which works with centralized data that all accountants in the company can access. It is also reliable, secure, and does not overburden the business infrastructure.
With accounting software, you can also manage payables and receivables, balance cash flow, account transactions, and so on. All stakeholders can access it from anywhere, making bookkeeping an effortless task for budding businesses. This is beneficial, especially for small businesses, as they do not have to allocate resources to manage accounts.
4. File Quarterly Taxes
Filing taxes is a stressful task for any business. But if done improperly, it can cost you a lot of money and may even lead to audits. The bigger your organization, the more complex is the tax filing process. The best thing is to do it through an experienced accountant who can sort through all the sordid details.
To reduce stress, you should file business taxes quarterly. It makes your annual tax report much easier and less stressful. It also eases the burden of paying a huge amount at the end of the year, especially for smaller businesses.
Most payroll platforms offer tax services to their clients. With payroll software also, you can file quarterly taxes automatically.
5. Organize Everything
Organizing is the key to a stress-free tax season. Make sure you organize all documents, files, and folders related to financial transactions. This goes for both physical bills as well as digital records.
Create a folder structure on your computer to store all receipts and investment proofs. Even if you have physical copies, make sure to scan and digitize them. Some categories that can help you organize documents are:
- Company Documents
- Employee Records
- Returns and Tax Filings
- Miscellaneous Receipts
You can also sort documents by year and expense types for better navigation. This folder structure makes your life easier while filing taxes. Another security measure is to store these records in the cloud to eliminate the risk of loss.
The simplest way to reduce stress from the accounting process in 2021 is to adopt automation software. With automatic handling of finances, you can live stress-free and focus only on growing your business.
Judy is a freelance finance writer focusing on exploring topics that help new entrepreneurs and emerging business houses grow and reach their goals.