3 Ways Entrepreneurs and Small Business Owners Can Save Time!
Guest Post from Stephen Reh of Reh Wealth Advisors!
I would like to thank Lauren Zangardi Haynes, CIMA, CFP® for inviting me to write an article this month. Lauren and I were discussing challenges facing entrepreneurs and small business owners and ways to overcome those challenges. Entrepreneurs often cringe at the thought of expense reports, income statements, balance sheets and taxes. While these documents are critical to securing financing for future growth, entrepreneurs are looking for the least painful ways to provide good data to their banks and tax preparers. With the rare exception of some accountants, their passion often lies in other areas and to be perfectly honest, the accounting records are rarely the “special sauce” that makes their business successful.
Here are three ways entrepreneurs can save time running the business so they can instead focus on growing the business.
Segregate Personal and Business Accounts
Even if your business is run as a sole proprietorship, obtain a credit card and bank account that you can separate your personal transactions from your business transactions. If your business is going to be charged too much for its volume at a traditional bank, consider opening a brokerage account with check writing attached. Most brokerage accounts from discount brokers offer free check writing As always, look for hidden fees. If a brokerage account won’t work for you explore credit unions or local banks.
Keep track of the personal money you put into your business and the withdrawals you make from your business. Accounting software will often make this very easy, which lead us to our next topic.
Cloud Based Accounting Books and Records
While you can operate your business from spreadsheets and attempt to construct books and records your accountant can use, I am a big fan of starting with QuickBooks Online. By using the online version its accessible from anywhere and there is an app for your smartphone. Most of your business’s transactions can be easily organized in a format your accountant can recognize. Most tax preparers are familiar with QuickBooks, and they may be willing to help set up QuickBooks to provide them the data they need when tax time arrives. QuickBooks online even offers a free login for your accountant/tax preparer to access your financial records.
QuickBooks will let you sync your credit card transactions and bank transactions, which will save you time. It remembers how you coded the expenses the last time and really helps you get back to working on your business. Most entrepreneurs despise the accounting and finance side of a business and want to get back to the passion that made them start their business in the first place.
If you followed our first tip and segregated your personal and business transactions, when you sync your accounts from your bank and your credit cards you will simply be accepting all the transactions into your accounting software. For most businesses, many of your expenses are from similar vendors each month, which means that Quickbooks will remember how you treated the expense previously. With time, I think you will find this keeps you organized and saves you time. Plus your tax preparer will thank you when it’s time to prepare your tax return.
A few other key benefits are the ability for Quickbooks to email invoices to your customers, accept credit/debit card payments or even ACH bank payments. The payment when received is automatically received into your accounting records saving you time. Providing your customer an easy way to pay you will usually reduce how long you are waiting on payments from your customers.
Receipts – Use your Smartphone
Receipts are something that many entrepreneurs hate hassling with and often lose. My first recommendation is to use that handy scanner in your pocket or purse. Don’t have a scanner you say? You have the smart phone with a camera, snap a quick picture of your receipt and now you do not have to worry about losing it. Bonus points for emailing it to yourself with the subject “receipt” which makes it easy to find and search for when you are looking for those pesky receipts. For those using Quickbooks Online, you can even attach the receipt to the expense in the software.
This tip also works when you need to sign and send documents when you don't have access to a scanner or fax machine. Simply sign, take a picture and send to your recipient. Remember to never email social security numbers, account numbers or any client sensitive data!
Mileage – Use your Calendar
Many entrepreneurs are losing the benefit of a mileage deduction on their tax return because they do not properly track it. In order to deduct your business mileage you need to properly track it. The IRS wants to know when you are going, how far you are traveling and why. One way to track this is to purchase a travel log notebook to keep in your car. Of course, there is also an app for that. Some apps to check out such as Everlance or Triplog. Other business owners have success tracking their mileage in the smartphone calendar.
Stephen Reh CFA, MBA, CFP® is a financial planner in Southern California. Steve founded www.investwithsteve.com and Reh Wealth Advisors LLC in 2010 to provide fee only asset management and financial planning.