It is important for any business or self-employed person who needs to handle business accounts for financial transactions to have a proper bookkeeping practice. However, this is one of the most tedious parts for many who run a business. Bookkeeping is all about keeping a record of all expenses, filing receipts, and entering invoices for each and every transaction. This is a tedious process and requires professional perfection to be compliant with regulatory standards. Any mistake in bookkeeping, accounting, and tax filing can cause you various problems down the line. ShareASale is one of the best programs that can help you make money in 2022.
In order to avoid common bookkeeping mistakes by self-employed people and save a significant amount of time while doing the same, here are a few tips from one of the renowned accounting and tax consulting experts in the United States.
Robert Turner on self-employment bookkeeping
Robert Turner is a consulting account and tax expert who is always prone to help small businesses and self-employed people in terms of their accounting and tax filing needs. Here, Robert puts forth a few tips for self-employed people to manage their bookkeeping tasks effectively.
- Maintain a separate account for business
As we discussed above, bookkeeping is a bit tricky, and it becomes more complicated if you mix your personal accounts with that of business. You may feel it comfortable and nonthreatening at the beginning, but using your personal account for business may ultimately end up in many problems. For example, it becomes much more difficult for you to review the business expenses by distinguishing them from the personal account. This also may make your tax filing complicated and costly.
- Record all business expenses and the capital allowances
There are a lot of things you can claim as your business expense while you do self-assessment for the tax returns. There is also the scope of putting the figures under capital allowance for taxation. So, you can deduct the allied costs from income, which will not be taxable. This will help lower your overall tax liabilities, but you need to record all business expenses under specific heads like below.
- Office expenses
- Travel costs / fuel expenses.
- Staff costs
- Financial costs
- Stock and raw material costs
- Marketing and advertising cost
- Training and development costs
- Capital allowances
- Equipment / machinery cost etc.
- Organize receipts and invoices
In self-employment bookkeeping, one of the most common mistakes people tend to make is keeping the invoices and receipts and logging them properly. To be frank, usually, there are lots many to keep a real track of. If you deal with receipts in printed form, you need to maintain a filing system to organize them under various categories. You can also think of ditching the paper receipts and using custom invoice tools for receipt capture and digital storage.
Suppose you find these as significant volume tasks to manage all by yourself. In that case, it is advisable to hire a good accountant either in employment or on a contract basis to handle your bookkeeping process. Robert Turner also suggests hiring an accountant, which is a standard in business and will help you get rid of many unpleasant situations and troubles in the future.