Tax season puts a focus on bookkeeping, accounting, and business practices, as small businesses often scramble to gather information and revisit transactions from the past year. Unfortunately, businesses then all too often revert to old inefficiencies once the paperwork, returns, and reports are completed – creating the same frenzy the next tax season.

This doesn’t have to be the case. Paying attention year-round to processes and implementing smart systems will make financial transactions, recording, and reporting much easier – for every tax season and throughout the year.

Consider these recommendations:

Technology

Accounting software is the foundation of modern bookkeeping and offers streamlined tools and real-time data for accurate and easily-accessible information – yet it’s easy for a system to become outdated. Make sure you are using the most recent version of software your hardware can handle updates and download them as they become available. Investing in technology now – whether in purchasing new software or updating your current set-up – will be more cost-effective than scrambling under pressure when there’s a problem.

Identify what your goals and uses are for technology, and research the options. Analyze the long-term benefits rather than simply selecting the lowest-cost option.

It’s also important to consider how your technology systems integrate with other platforms and functions, such as payroll, CRM, e-commerce, inventory management, or others across your enterprise. AI, machine learning, and cloud-based options can automate many tasks and add even more sophistication, scalability, and efficiency to address compliance requirements and provide continuous improvement and even fraud detection.

Security

Take proactive security steps to protect data from hackers. With the increasing use of cloud services—from VPN services to antivirus software and many others—databases can be vulnerable. Ensure your systems are protected and that your barriers are regularly tested and updated to maintain your company’s data security, your customer information, and your business’ reputation.

Accounts Receivable

Your organization deserves everything it is due, when it’s due, and without too many additional steps or time. Review your bookkeeping software to make sure you’re using every tool and feature it offers. Embrace technologies and automation that will improve on-time invoice payments. Make sure your billing system provides customers an easy payment to increase response time and reduce processing time and fees so you improve cash flow and take in funds more quickly. You can set up notifications and automated reports so you always know what’s due, and when.

Budgeting

Regularly revisit and update your annual budget to reflect changing environments, requirements, and opportunities. New businesses might start with short-term budgeting, tracking every cost-related activity, and plan only a few months ahead. Tracking every expense to strategic goals ensures every cost is justified and connects to the bottom line. Evaluate your vendors to confirm each continues to provide value and competitive pricing to your organization. Look ahead a few months to forecast bumps that might be coming and make sure your budget can absorb what might be ahead.

Debt

Regular budgeting also will help your organization manage debt. Data indicates that 60% or more of companies are over-leveraged, and 90% of stressed companies are in that position due to debt. Sounds simple, but always beware of even short-term debt, and consider the advantage of operating with less revenue than you actually bring in. Cash-flow problems can quickly spiral out of control when you borrow money without a plan to pay it back. If you must borrow, commit to using a percentage of monthly profits to pay off any debts from smallest to largest. Build these repayments into your budget and stick to it.

Billing

Don’t let billing become an afterthought! When things get busy, it can be easy to let billing slide, but it’s essential that you bill regularly on the cycle you establish with customers—immediately, monthly, or quarterly. Accounting software makes this easy and enables you to bill with limited data entry, keep track of outgoing invoices, and follow up to ensure timely payments.

Files

As our lives are more online than ever, it’s easy to forget the importance of documenting and saving essential records—contracts, receipts, correspondence related to receivables or payables, and more. Make sure your business has a system that captures, records, and files these items, and train your staff to use this system daily. It averts confusion and problems when they’re needed and helps make tax prep easier.

Separate Personal and Business Finances

For small businesses, the line between personal and business finances can easily become blurred. Be vigilant about what goes where to avoid confusion and potential issues down the line. Personal and business accounts should be segregated, and every transaction should be thoughtfully and accurately recorded in the proper account.

Work with an Accounting Professional

Through Client Accounting Services, an accounting professional, such as those at Dembo Jones, can help you set up the systems you need, ensure your company is following current tax laws, handle bookkeeping and accounting transactions, and keep your books in good order. We keep track of changing requirements for your industry, so you don’t have to, and we’ll make sure that you have what you need and when you need it.

Dembo Jones professionals are ready to help you understand what systems and processes are best for your business, and are available to work with you to implement them. Give us a call.