January – the time of year for goals, resolutions, and for me, tax prep. Cue all the dread. However, it doesn’t have to be that terrible and I have some tips for year end bookkeeping to help you! Disclaimer: I am not a professional bookkeeper or tax professional and I do hire a CPA to do my taxes. With that said, I’ve learned a some things that have helped me in my few years in business and they might help you too.

1. Keep up with your income and expenses monthly

Everyone hates doing this, but set aside an hour or two each month to handle this. I like to do it on the first Monday of each month since Mondays are my CEO day. I set aside 1-2 hours (usually one is enough!) and track all my income and expenses for the previous month. Lots of people use programs like QuickBooks which is great. My business is really small and my transactions are minimal, so I use Google Sheets.

2. Manage your receipts monthly

This is a chore, but honestly it’s such an easy one! I save my receipts as they come in and then crosscheck when I do my monthly totals to make sure I have all the receipts to match my expenses. For example, when I get an email from Flodesk with my receipt for the month, I save it right away. Then I don’t have to think about it again. I save my receipts by year and then by month and this keeps things manageable. Pro tip: I add the number of the month before the word so it keeps everything in order.

3. Do quarterly totals at the end of each tax quarter

If you keep up with your month end totals, then your quarterly totals should be a breeze. It’s important to do this quarterly so you know what to pay for your estimated taxes (see next point). I do my quarters based on the tax year: January-March, April-May, June-August, September-December since that’s what the IRS does.

4. Pay estimated quarterly taxes

This area can be stressful and difficult to understand, so be sure to talk to a tax professional, but my point here is to keep up with paying your taxes quarterly. It’s never fun paying taxes, but for me, it is so helpful to do it quarterly instead of having a giant amount at the end of the year.

4. Compile your quarterly totals for year end

Again, if you keep up with your monthly and quarterly totals, then the year end should be fairly manageable. Keeping track of your income and expenses as you go makes it simple to compile everything in one place. This also helps you see who paid you what and if necessary, getting a 1099 from clients. I do all of this and hand it over to my CPA to make sure I did everything right!

I’m sure there are lots of tips for year end bookkeeping, but this is what has worked for me over the years and I hope it helps you too!

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