Better Bookkeeping Habits in 2021

Better Bookkeeping Habits in 2021

With 2020 finally behind us, it’s time to create new habits for 2021. Have you thought about your bookkeeping habits from last year? Did they serve their purpose and help your business grow, or could you stand to adopt better habits in 2021?

Here are a few ways you can improve your bookkeeping habits in 2021 and beyond.

Create a Business Plan
Whether you’re a brand new business owner or a seasoned entrepreneur, it’s essential to have a business plan. If you haven’t already done so, the start of a new year can be a great time to create one.

It doesn’t have to be long or complicated, but it should provide an operational guideline for your business. You’ll be required to have a business plan when you apply for grants, loans, and other capital opportunities. You may need to apply for funds to help your business grow or even to keep it viable if the pandemic continues through the year.

Don’t Forget to Pay Yourself
Cash flow challenges can happen to any business, and it’s become more prominent as the pandemic lingers on. A recent survey by lending platform Kabbage found that about a quarter of small business owners who responded went up to six months without paying themselves.

Regardless of the reason for this, it’s important to pay yourself, whether the business is booming or struggling. You wouldn’t expect your employees to work for free, and you shouldn’t either.

An essential aspect of bookkeeping is keeping track of cash flow, inventory, taxes, and compensation. If you find yourself spending hours on these tasks, it might surprise you that hiring a professional can not only save you time but find the money you can now use to pay yourself.

Make a Plan to Tackle Your Debts
For many businesses, debt is a necessary means to building your company. As a business owner, you wear many hats, which can cause essential aspects like debt management to fall by the wayside.
One way to stay on top of your debts is to automate them. Setting reminders and auto-pay can ensure you’re paying on time with little effort on your part.

If your business requires more capital to keep running, consider an SBA loan rather than maxing out credit cards or other high-interest options. It can be hard to determine the best way to incur more debt and handle existing debts without potentially harming your business.

Work with a Professional
Unless your business is bookkeeping or accounting, it can be worth hiring a professional to keep track of your business expenses and help you craft a winning strategy.

You may only think about your accountant as tax season approaches, but you can benefit from their expertise year-round. Think of your accountant and bookkeeper as part of your team or a business advisor. They can keep you on track, ensure your meeting your goals, and spot potential issues before they become a problem.

Bookkeeping Tip: Don’t Buy a Car Without Doing These Five Steps

Bookkeeping Tip: Don’t Buy a Car Without Doing These Five Steps

1. Research, Research.

Sure, the commercials tell you what a car is offered for. They don’t tell you what you should really pay. Bring these items to the dealership to get the most bang for your buck:

  • Printouts on the true market value of the car from Kelley Blue Book, and
  • All the information from the dealer’s website on rates, incentives, rebates, and special finance deals.
  • All the information from the competition’s website on rates, incentives, rebates, and special finance deals.
  • Information on your trade in vehicles title, loan, value, etc (if you have one).
  • Information on you such as your credit score, banking info, and anything else that can help you get the dealer to give you competitive financing.

2. Check Out the Car

You probably know which vehicle on the lot is your preferred, but have a back up or two. Do a walk around when brought to the vehicle. Check for damage, dings, dents, etc. Your salesperson may ask for a credit check before the test drive. Tell them you are pre-approved, as this just adds time and effort to your purchase time. You will be asked for your driver’s license. Don’t be afraid to ask questions on the features of the car before getting in.

3. Test Drive Wisely

Follow these tips to get the most out of your test drive:

  1. Insist on test driving the car for at least 15 minutes.
  2. Don’t let the salesperson distract you if you are listening to the car or otherwise focused.
  3. Take a route that allows you to speed up, brake, take tight corners, and even rough street ways.
  4. You can test the radio for a few moments. Turn it off when satisfied. The noise can be distracting.
  5. Test all the instruments to see if they work.

4. Negotiate Like a Boss

Sales people will often as you to “make the opening bid.” Don’t fall for that. Ask for their best price up front. They will show you a document that outlines all the details on the car. Use your handouts from previous research to compare. Be prepared to walk away should the salesperson not meet or beat the prices. You may love the price and the car. Don’t buy until you’ve shopped at least two more times. Be sure to use this dealer’s numbers when visiting the next.

5. It’s Not Over Until You Sign

You have shopped around. You’ve found a car you like. You’re ready to sign. Now it’s time to face off with the dealer’s finance office. This person will attempt to sell you all types of extras from warranties to paint protection. Feel free to say no to these. They will push for the extended warranty, to which you should let them know you don’t intend to keep the car that long – even if you do. It is essential you ensure the numbers in the sales contract match the agreed-upon price you agreed to earlier. Get any needed repairs, upgrades, detailing, etc in writing before signing.

Congratulations: you are now ready for your new car! Come by and show us your new car.

4 Tips for Better Recordkeeping

4 Tips for Better Recordkeeping


1) Separate Business & Personal Bank Accounts

The law varies depending on your type of business entity, but the reality is you should keep your business and personal finances separate. Most banks offer low cost checking accounts you can open and use solely for business. Just having all your business transactions run through their own account will help you keep your business and personal finances separate, which is important. It will also give you the most basic look at what money is coming in and out of your business.

2) Use Accounting Software

There are some great options out there that range in cost from Free up to $100’s per month depending on the size and complexity of your business transactions. Most have a free trial. Try testing a few to see what works for you, or talk to a bookkeeper to see what software they would recommend for business size and type. A few options you might consider are Quickbooks, Freshbooks, or Xero. Even if you are using a simple spreadsheet, that is a step in the right direction.

3) Scan Your Receipts

Receipts are the proof that your expense was indeed business related. In our world of technology and smartphones, there is really no excuse to not having record of your receipts. Many accounting softwares now have receipt scanning built-in, so you can snap the receipt on your smartphone and it auto loads into the software. You can also use Evernote to snap pictures of receipts to save in your digital filing cabinet. I strongly recommend storing your receipts in digital form. This way they won’t fade, degrade, or get lost as easily (We all know how tricky they can be!) Plus with all of the things we buy online, most of our receipts are already digital.

4) Hire a Professional Tax Preparer

Do it yourself Software is great for many people, but if you aren’t sure how to answer the automated questionnaire then you’re out of luck and it won’t think the ask the questions a tax professional will. As much as we all want to be able to save money and do it ourselves, you’re not a tax expert. How do you know what is and isn’t deductible; how to properly depreciate vs deduct; whether or not you need to file 1099’s for those you have paid but weren’t employees; or how much to pay in estimated taxes? If any of those terms confused you, that is good sign you want to work with a professional, and save the frustrations of trying to do it yourself. If you need help, please consider Alvarez Tax Services, you can contact us by calling us at 714-400-9201.

Professional Tax & Bookkeeping Services in OC. Call now for a FREE consultation at: (714) 400-9201, Don’t do this!

Professional Tax & Bookkeeping Services in OC. Call now for a FREE consultation at: (714) 400-9201, Don’t do this!

3 Bookkeeping Mistakes, Don’t do this!

Running your own business? Even tiny bookkeeping mistakes can end up being a huge pain. Here are 3 mistakes to avoid.

#1 Completing your own tax return – Running your own business is complicated enough, and it’s always better to have a professional do your taxes. If you end up doing it yourself and you make a mistake, you might draw attention of the IRS.

#2 Combining business and your own personal expenses – When you just start running your usiness, you might get into the bad habit of using your personal account or credit card for the occasional business purchases, or you end up making a personal purchase with business funds. Don’t do this, this makes for very messy bookkeeping because you will have to sort this out later, and you might miss out on some really good tax write offs.

#3 Throwing away reciepts – As you know, most of us throw away our everyday personal reciepts, but it’s a must to save business receipts. When doing taxes, your accountant will have an easier time to include all your expenses. And if the IRS decides to look into your return, you’ll have the peace of mind to proved that your write offs are accurate and true.

Need more tips or help, we are just a phone call away.
Contact us at: 714-400-9201


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