Tip #1: Keep it Separated
Too many business owners mix and mingle their personal and professional finances. Even if you are a sole proprietor keep you business, and your personal. Set up separate checking accounts and if you need some funds from your small business, write yourself a check, or make a cash withdrawal. This will help come tax time when you need to separate business expenses. Even though the form of business is a path-through, you should still make sure a separation takes place. This will make expense tracking and budgeting much easier on you.
Tip #2: Keep Up to Date
Falling behind on your bookkeeping will only make matters worse. Set a specific time aside to deal primarily with recordkeeping. This will make tax time easier and quicker for you or your accountant. If you simply do not have the time necessary to complete the task, then look at outsourcing the work, or bringing in a part-time bookkeeper. This necessary function of business is so crucial to the success of the business that if cannot be put off and forgotten.
Tip #3: Use Your Numbers
Your financials can tell you a lot about your business, you just have to know what to look for. Check with your financial guru (CPA, bookkeeper, financial analyst, and/or consultant) at least quarterly and have them give you a thorough breakdown of your financial position. These individuals should be able to give you a written and oral report on how your business is functioning. Which areas are weak, and which are strong. Along with that they should also provide advice and an action plan on how you can go about strengthening your financial position.
Tip #4: Know When to Recognize
Recognizing revenue and expenses can make a difference in how your business performs month-to-month and how your taxes are calculated. If you use the accrual basis accounting system your year and month end numbers will be quite different then the cash basis accounting. Be sure you know what accounting method you are using, and how to recognize revenues and expenses correctly.
Tip #5: Check, Check, and Double Check
If you do not use an automated accounting software program (QuickBooks, Peachtree, Great Plains, etc) then there is a chance you will not balanced at the end of every period. By using a Trial Balance you can catch mistakes early and often, this saves from year-end headaches and added expense from your CPA while he/she finds the problem associated with your calculation error. Even if you use accounting software you can still enter erroneous information, be sure to reconcile your bank account against the program every month, this will allow you to catch errors that may have happened when filling out checks, invoices, or journals entries.
Source : http://aga.careerbank.com/