In last week’s show, we discussed how we can become better sellers, just by understanding Ecommerce accounting a little better. We were joined by experts in the field Lil Roberts and forensic CPA Lewis, who tap into the topic we all avoid… accounting. Lil and Lewis teach us the differences between tax codes and how to maximize tax savings using monthly bookkeeping.
We may try to avoid the dreaded accounting, but it will always chase us to be done. Ecomm is currently an exploding topic in the world of business, where tech and business have joined together in holy matrimony, so why are we afraid to get stuck into the accounting side of things? Is it because it’s considered a dry and boring topic? Lil Roberts and Lewis are here to lighten up the “pulling teeth” topic and ease us into the big ‘A’.
First things first, sign up with the right entity, keep up with your monthly bookings and keep track of your expenses.
Is my company a foreign entity?
A foreign entity is an established business that is legally registered to operate in a state or country outside of its original location. For example, if your business was set up in Florida, you can operate in New York.
However, there are different types of entities depending on where you live, and whether you are an American citizen living in that state or country. These factors are important to determine which tax code return entity your company needs.
Most startup companies should be on an LLC [Limited Liability Company] entity because an LLC helps startups become a “different tax type” due to its flexibility.
The other types of entities, ‘Schedule C’ and ‘S-Corp’ is a little bit more tricky and come with less flexibility. These tax types are only for US citizens.
The art of bookkeeping
How do you keep up with your monthly bookkeeping? Do you tackle it yourself? Or do you pay a third party to get down and dirty with the books? Lil said, “Don’t wait till the end of the year to try and do your books because you’re going to miss out on valuable taxing you can have.”
To do your monthly bookkeeping, you need to go about it in one of two ways:
You should use either Zero or QBS, both online resources are great “tools” to help you with your bookkeeping and can help you get the job done efficiently and in a timely manner with the helping hand of trained professionals. Having the right tools to support you during the bookkeeping process, even if you tackle it alone, will save you money.
So why is monthly bookkeeping important? Why the four-week system?
Things change monthly, and you want to know if you are PROFITABLE each month. From that, you can minimize your taxes by accounting for all your expenses. If it’s cash or credit card you may be using to spend, you may not know that it’s hitting the business bank account.
“Don’t wait till the end of the year to try and do your books because you’re going to miss out on valuable taxing you can have.”Lil Roberts
Keeping track of your expenses will help you live an easier, less stressful life, and be in the know with your expenses and your taxes, without you being faced with a hefty bill.
If you have a vehicle, it is important to count that into your monthly bookkeeping and expenses, as well as any retirement funds.
Top tip from Lil and Lewis: Pay your taxes in full by the end of the year! Pre-paying is an excellent strategy for working with expenses and matching your expenses with your revenue.
We know you’d like to hear more tips and advice from the experts! Listen to the full session above and get all the information you need to keep track of your business accounting.