Tips and Tricks for Entrepreneurs During Tax Season
As we approach tax season, many small businesses and entrepreneurs are beginning to open their books and check their numbers. We know how stressful this can be, which is why we sat down with Nathan Hirsch, the creator of the amazing bookkeeping software, EcomBalance, to talk about ways small business taxes can be simplified and streamlined.
Nathan’s Tips and Tricks for Tax Season
In our discussion with Nathan, we learned a lot of fun things! In addition to learning all about his business, EcomBalance, we got a few insider tips for tax season. To get the most out of your tax deduction, keep on scrolling!
1. Know Your Numbers
Nathan’s biggest tip is simple.
Know your numbers!
There are so many different bookkeeping options out there for small business taxes, but not all of them are great. In fact, many of them just aren’t made for entrepreneurs. Instead, you should be thinking about using your metrics or subscribing to the EcomBalance service. This way, you know exactly what your cash flow looks like.
While you’re tracking your metrics, be sure to keep an eye out for trends. What’s going up? What’s coming down? You need to know all of this information to make future business decisions, and the money you spend can help you when it’s time to file your taxes.
2. Stay Up to Date
Nathan’s second tip for tax season is to always be checking your numbers. Many business owners make the mistake of only checking their books once or twice every year. At best, they may peek at their numbers once every quarter.
Instead, Nathan says you should be keeping constant tabs on your business. This will let you see precise trends and customer habits. You can do this manually, but the most reliable way to keep tabs on this information is to utilize automated tracking and bookkeeping software.
3. Review Your Numbers Together
In addition to keeping tabs on your numbers, you also want to make sure everyone is informed. Nathan’s third tip is to sit down with your business partner (or partners) whenever you get your hands on a report. Go over the numbers together and see what patterns you can spot.
If you see a trend that you want to track, discuss it with your team. Highlight that metric—whatever it may be—and keep it in mind when you get your next statement. If you’re using an automated tool, like Nathan’s EcomBalance, you can automatically flag a metric for tracking. This way, when the next report rolls in, you’ll have that number on top!
These are your key metrics, and it’s always useful to have more than one or two on your radar. Nathan, for instance, shared that his last business was frequently tracking their billable hours, client acquisition cost, and client retention.
4. Don’t Count on Built-In Metrics
Another mistake that many business owners make is relying on the built-in metrics of a platform. This, Nathan says, is especially prevalent on e-commerce sites, such as Amazon.
These platforms do not properly track all of the information you need to know! They’ll often omit or misrepresent many key statistics. You’ll need to do the work yourself to get a proper reading of your profit to cost ratio. Moreover, to keep you coming back to their service, many of these sites will only show you your net profits. This figure sneakily hides all of the fees that they’re charging you for shipping, handling, and administration.
That’s not to say that these services aren’t great! Many members of the Rainmaker family use popular e-commerce sites. Nathan’s advice isn’t focused on taking down these sites, because they help us achieve our goals. Instead, he wants small business owners to be aware of the costs that they’re incurring from these services.
5. Never Do Your Own Bookkeeping
Nathan’s final secret for the Rainmaker family is that you should NEVER do your own bookkeeping! That’s the job of a CPA or software, such as EcomBalance.
This tip is focused on keeping you safe. Most entrepreneurs don’t understand the ins and outs of bookkeeping, which means that they’re prone to making mistakes when they file their taxes. When you file, these little mistakes can come back to bite you!
Learn More About Business!
As Rainmakers, we’re dedicated to providing you with the best business tips, tricks, and advice. If you’re ready to create a rich financial future for your family, then join us! Keep tabs on our blog to see more updates like this, and be sure to look through our past podcasts.
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