As a small business owner, staying on top of your finances is crucial. Tracking income and expenses isn’t just about staying organized, you need to know your business’s financial health. This is how you qualify for loans, avoid tax trouble, and keep your operations running smoothly. Without the right tools, you risk under-reporting income, missing tax write offs, or even facing legal issues. Below are five tools to help, plus some tips and examples to keep your business on track.
1. Accounting App (ie QuickBooks)
Using an accounting app like QuickBooks or Wave is essential for recording income and expenses. Accounting apps helps you organizing transactions and generating financial reports like the profit and loss statement.
For example, if you’re a small bakery, you can track every expense. You’ll know how much you’re spending on flour purchases to delivery fees. When you know how much you’re spending, you can make better purchasing decisions and know how to price your products. Plus, your transactions are always at your fingertips when you need to apply for small business loans or grants.
What happens if you don’t use an accounting app?
Without one, you’ll likely struggle to track cash flow, which can make tax season a nightmare. Businesses that don’t track expenses accurately often overpay on taxes or face penalties for missing deadlines.
Tip: Automate transactions by connecting your business bank account, and let the software pull data directly, reducing errors and manual input.
2. Business Bank Account
A separate business bank account isn’t just smart, it’s non-negotiable. This makes it easy to see what money is coming in and out of your business. You’ll use this account to connect with your accounting app. This keeps personal and business finances separate, which simplifies bookkeeping, gives you clean records for tax time, and helps protect your business legally
Tip: If you mix personal and business finances, you can lose legal protections if someone sues your business. Also, it makes your tax filing a headache.
3. The Tax Index
Identifying eligible deductions is critical for lowering your tax bill. Use The Tax Index to identify qualified write-offs so you’re not leaving money on the table. You’ll know everything from office supplies to business travel expenses.
When you don’t know the expenses you can write off, you miss saving on thousands, that could have been used to reinvest.
4. Bookkeeping Basics Workbook
The Bookkeeping Basics Workbook will walk you through your accounting app step-by-step. It helps you understand reports, set up grant transactions, and track financial health. It’s perfect for hands-on business owners who want to make sure everything’s set up correctly.
For example, if you’re applying for small business funding, knowing how to pull reports is essential.
Not into setting it up yourself?
If you’re not into setting it up yourself, Tamara Knows Taxes offers an accounting app setup service. It comes with coaching so you’ll know how to handle everything after the setup.
5. The Know Receipt Book
Although your money is tracked through your business bank account, you need a system for organizing your receipts, especially cash. Not holding onto receipts can land you in hot water if you are audited by the IRS. The Known Receipt Book help you organize your receipts, match with bank transactions, and track cash purchases.
Imagine you’re a small business consultant, you grab lunch with a client but the bank description is unclear. The Known Receipt Book was created for you organize your receipts on the go to refer back to later.
Remember, cash expenses aren’t automatically added to your accounting app; you need to add these manually. Having a system to organize these receipts will save you time.
Staying on top of your finances is key for every business owner. Using tools like an accounting app, a business bank account, and the Tax Index; ensures you’re tracking income and expenses accurately. You’ll be able to identify eligible write offs and make smart financial decisions. The Bookkeeping Basics Workbook helps you master your accounting setup, and the Know Receipt Book keeps your records audit-ready. Without these, you risk missing deductions, overpaying taxes, or even legal trouble.
Tamara Knows Taxes is here to help you get your bookkeeping right, so you can focus on running your business.
