Why Your Small Business Taxes Are A Mess Every Year
In the small business world of creatives, we talk a lot about social media, blogging, retail and e-commerce, systems and hacks; the whole nine. We rarely talk about small business finances. We will talk about all things pretty, growing our brands online, and becoming an influencer in our niche, but the number one thing we don’t discuss much is the ugliness of organizing tax documents, receipts, and records.
This post contains affiliate links which means I am recommending a brand that would absolutely help your business while earning a small commission for referring you. Don't worry, this product is Cafe approved!
Not many people love the time it takes to file invoices, scan receipts, enter deposit and withdrawal transactions, plus keep up with last minute expenses. For some of us who stay on the move, we wait until the last minute to try to remember events during the year, or collect receipts that we have. If you’re the business owner who mixes personal and business finances together, I’ll assume you don’t look forward to filing your business taxes (even if you file with your social under your legal name). You have to sort and organize your business transactions for the entire year to give to your accountant or tax preparer the information they need. It’s not fun.
Maybe you don’t have a good record keeping system in place to make your business life easier. Maybe you just suck at keeping receipts for everything business related (join the club!). It’s nerve-wracking, but I know what the root issue is. The #1 reason why your taxes are a mess every year is because you aren’t using the cloud-based accounting strategy. It’s perfect for those who need help staying organized and it’s perfect for lazy business owners who hate this part of the game. But, it has to be done!
What is cloud-based accounting?
It’s a pretty literal term. But, for those who love details, think of apps that you can take and access anywhere with an internet or WiFi connection. Cloud-based software allows cloud based functions on any device to help you stay current everyday. Since we all know accounting is what your business needs to understand its financial health and keep track of how the business is doing on a consistent basis, we understand when it marries a cloud function, business is better.
Cloud-based accounting means all of the receipts, invoices, and expenses you have monthly will be easier to record and report to the IRS. Keeping these records may be hard to keep up with if you have a hectic schedule and can’t keep your receipts together. That’s why Xero, a cloud-based accounting software, is the perfect match for small business owners. It will marry you to a better process and streamline your financial record system. Let’s dive deeper into the benefits of Xero:
Easier to manage/no paper trail
We’re in a time where everything has to be mobile-friendly. A lot of us are moving around attending events and meeting with clients each week and every month. Cloud-based accounting is the absolute best way to stay organized and to avoid overwhelm with paperwork at the end of the business day or week. Paperless anything is amazing for on-the-go professionals, especially freelancers who invest heavily in supplies to service clients.
Capture Expenses on the go
Keeping up with every receipt is a huge problem many people have across all industries. My bridal business makes me a living witness. My accounting background makes me a living witness.
It is hard to keep up with receipts at events where everything is urgent and crowds are moving. A system or special place for keeping and writing receipts isn’t easy if there is physical paperwork involved. There is always too much going at busy events!
Xero is perfect for small business owners who have teams as well. I remember doing expense reports when I was an accountant for a book publishing company. There were several times I didn’t have receipts from employees who traveled. Bonus perk: Xero allows you to give access to others so this problem won’t exist. At the time, if there was a system that allowed others to capture receipts right away, hunting employees down would be no more when I created expense reports for their reimbursement requests.
When you use a Xero, it integrates with payment systems such as Stripe, Square, PayPal, even Squarespace if someone quickly orders product from your website! So, when you make a sale and generate merchant fees, not only with your payment system record your sale and fee transactions, but Xero will create the items for your accounting records. You can not beat that! Just make sure you have followed all of the syncing instructions properly to make a smooth transition process.
Painless data entry
Since the software is online, you have access at anytime and on any device. It makes tasks like entering bank deposits or withdrawals easy breezy. You can literally take pictures of your receipts and the software will record the entry. Now, tell me that isn’t best things since a French Vanilla Latte!
When things like data entry is automated, you avoid less errors. Automation creates time as it is less time consuming when data entry is done for you. It’s also less costly because time is money, right? Xero has your back with its automated data entry feature. There’s more...
Think of the apps on your phone that tell you when it’s time to update them. It’s the same with Xero. You don’t have to worry about your accounting software being outdated. You don’t have to reach for another hard drive or USB to backup what you have; you simply give it permission to update and your software will stay current and efficient.
Xero is perfect, trust me! Try it for yourself. There is a 30-day free trial (no credit card required). On top of that, there are discounts for US, UK, and non-profit business owners:
US: Special introductory offer of 30% off for the first six months with promo code XERO30
Nonprofits: Exclusive 25% discount
UK: Xero for Startups – 50% off for the first 12 months
I’ve talked to so many people and have coached a couple of clients who don’t have their finances in order. That’s why I decided to write about the business finance struggle because things are not always about external growth. Internal efficiency is equally necessary. Besides, you don’t want to get hit with penalties because you weren’t executing a good financial recording system. Get on the trial with Xero and relieve the stress when filing your business taxes!