It’s mostly an unwanted challenge that most small business owners face - that looming pile of paperwork in the corner of the office that desperately needs organizing.
Since people generally tend to focus on the core goal and operations of the company, accounting is often neglected. What most business owners don’t always realize is that this disorganized mess can likely cost you a lot of money! Can you remember each invoice and whether it was paid or not?
The topic of preparatory accounting and accounting in general often costs you time and nerves. How long did it take you to find a receipt or invoice you needed among the piles of papers? And of course, there is a risk of an audit any time a deduction is made without proof of receipt or as a result of another lost or misplaced invoice. No company wants to attract additional attention during an audit by the tax office.
When the annual financial statements are just around the corner, it is time to put together your relevant tax documents for the year and file the necessary tax returns. This is the ideal time to take back control of that pile of paper and start getting your accounting in order, going forward!
Below are our top 5 tips to get organized and avoid losing sleep when you can’t find documents even though you swear you left them on your desk or in a drawer. Tax return preparation shouldn’t require a flashlight and a set of knee pads to protect your knees while hunting for lost documents under desks and other furniture!
Table of contents
- Accounting software
- Keep an eye on your mileage
- Synchronize bank statements
- Your company credit card
- Prepare for risks
1. **Accounting software **
Familiarize yourself with the plethora of excellent accounting software solutions available on the market. GetMyInvoices is a popular choice for many small business owners across the country – and for good reason. It’s easy to set up and one of the most user-friendly and affordable software solutions.
By the way, take some time to familiarize yourself with this solution Completely free for 14 days possible. The invoices and other documents are automatically retrieved from thousands of sources - from portals to email inboxes and cloud storage to scanned documents. All documents are stored and organized in one place. From there they can be conveniently forwarded to numerous other solutions, for example to your accounting software or your tax advisor. If you work with GetMyInvoices and/or one of the other excellent accounting solutions, you’ll be surprised to find that organizing your books isn’t as difficult as you previously thought.
A comprehensive accounting software solution should allow you to handle various tasks, from reconciling your bank statements to recording your payroll to tracking your accounts receivable and accounts payable. Using quality preparatory accounting software means you’ll never have to search for invoices or other documents again, while also keeping track of every aspect of your business operations.
2. Keep track of your mileage in the eye
Design a system that allows you to track your mileage. Like most small business owners, you probably spend a lot of time on the road. It is essential to record your mileage as well as other travel expenses you incur so that you can benefit from the relevant tax deductions. A logbook is the easiest and most convenient way to do this.
The logbook should be kept in your vehicle so that you can easily record the mileage when leaving and returning from a business errand without leaving your vehicle. Include a date and reason for the trip so that you can refer to it later and prove that you were on a business trip.
At the end of each month, tear out the relevant page of the logbook and enter the information into your accounting program. You can simplify things even further by capturing the information in a smartphone logging or mileage application. There are a variety of such apps for both Android and Apple users.
3. Synchronize bank statements
Most banks will be able to accommodate requests to provide a monthly statement by a specific date. This allows you to sync all of your credit cards and statements for the same period, making it much easier to reconcile statements at the end of each month. You can use GetMyInvoices Automatically import all bank statements from your bank into your account every day.
It is much more efficient to match expenses to the corresponding item on a credit card or bank statement when the data correlates correctly. Remember that it is highly recommended to keep your personal and business accounts and expenses separate. You complicate your bookkeeping when you can’t distinguish between personal and business transactions.
4. **Your company credit card **
Unlike your personal credit card, your business credit card should come with a variety of additional benefits, such as higher spending limits, discounts on purchases (from renting a car to purchasing office supplies), as well as rewards programs and access to helpful reporting tools.
A good history of on-time payments will also improve your business’s credit rating. This, in turn, gives you access to more competitive rates when applying for a business loan, line of credit or financing large purchases for your business.
Using a credit card also helps with accounting. Every purchase made with the credit card is clearly recorded and listed categorically on your monthly credit card statement for faster and easier reconciliation. Using a credit card for every business purchase also protects you from a number of problems that may arise later, such as if your computer or software suddenly dies.
5. **Prepare for risks **
Prepare for loss of data and papers due to fire, flood, theft, or computer malfunction. At the end of each day, back up all your data digitally in the cloud or on an external drive. Speak with an IT specialist to determine your needs and prepare a backup and data recovery solution that meets the unique needs of your business. Backing up your data is crucial to preventing the loss of your accounting and business records for any reason. GetMyInvoices carries out regular encrypted backups and thus protects against data loss. The backups are only stored on German servers and secured at various locations. You can also synchronize all your invoices and receipts with third-party systems such as document management software and save them there in the cloud.
Furthermore, every entrepreneur is obliged to document the process. Read more about this in our blog: Procedural documentation according to GoBD: Who needs it, when and why?
