One of the most difficult challenges of running a business is managing regulatory compliances, organising legal work and bookkeeping. Ask anyone who doesn’t have a background in accounting and finance, and they’re most likely to admit it. But running a business can be simplified a great deal with digital bookkeeping and online accounting. It makes life easier for businesses to organise business with online tools & get a good assessment of where they stand.
Here’s a look at some of the ways to effectively manage your business with digital bookkeeping:
1. Digitize Expenses
As a business owner, you are required to maintain documentation for the expenses incurred in your business. While online and digital payments create an automatic record, businesses can also do well to keep all receipts in their records. The receipts and bills can be scanned using tools like Genius scan.
All expenses and bills can be organized digitally according to date and relevant details. This can be uploaded in your bookkeeping software. The online accounting tools are also capable of reading the hard copy of your expenses and bill receipts with automated scanning features. This will reduce your overhead of entering the bills and details to save time.
Once all your expenses are recorded, you can reconcile the bills received and payments made. This can be done by your bookkeeping software to give you a tab of your pending payments to vendors and purchases etc. For contractor payments & other purchases, you may be required to file the taxes too. An online bookkeeping software will help you make tax payments and provide tax receipts to vendors & contractors.
2. Bank Sync
Many businesses operate with more than one bank account. Integrating and synching all your bank accounts with a bookkeeping software will help you get all your data at one place. Accounts can be reconciled with as on date bank statements and descriptions. The digital bookkeeping allows a company to reconcile all statements as per banking transactions done in a given time period.
The online accounting softwares are typically equipped with bulk uploads as well as integration options to fetch bank statements automatically. These statements can then be classified, reconciled and recorded in the accounts. All bank accounts need to be reconciled to prepare the accounting statements for the company.
The direct integration of bank accounts with digital bookkeeping software allows it to fetch and sync transactions directly with any manual inputs. Once the transactions are reconciled, you can classify them or change them as per your needs.
3. Online Tax Calendar
The IRS provides options for an online tax calendar for various businesses and self-employed. When you avail digital bookkeeping services, you can avoid penalties, late filings and legal notices for your business. The online accounting software provides options for automated reminders to e-file your taxes on time.
By outsourcing accounting and tax compliance, your business can save a lot of time, costs and overall efficiency in administration. The digital bookkeeping services take care of all compliances for a business to meet its regulatory needs on time. Digital bookkeeping software can also provide management reports on business performance with real time data.
The online software allows you to get all your financial information for your business. You can view the information by week, month, quarter, year or any specific time frame. These reports also provide you a break-up of all the incomes, expenses & taxes due for payment as per the IRS tax calendar.
4. Set-up Employment, Wage & Contractor Reporting
As a business, you need to take set-up the payroll for your employees and look at the compliance requirements for the wage reporting. The state and federal taxes can be taken care of with a bookkeeping software. The taxes and set-up details can be configured as per the business set-up. There are also requirements for minimum wages as per state laws etc. that businesses can automate.
The employee taxes can be deducted and paid to the government through online services integrated to the bookkeeping software. The e-filing forms for 940, 941 or 944 etc. can also be done with the help of the online software. Companies can also set-up vendor and contractor payments on their accounting software. The payments to vendors, taxes paid to the government, receipts, forms for withheld taxes etc. can be automated with online bookkeeping softwares.
5. e-File Taxes
The IRS site provides e-filing facilities for businesses and individuals. Businesses can calculate the taxes using online services from the IRS. The bookkeeping software can be used for e-filing the taxes. The digital bookkeeping software can prepare the accounting statements for various businesses as per the IRS classification below:
Someone who owns an unincorporated business by themselves.
A relationship existing between two or more persons who join to carry on a trade or business.
Foreign businesses with activities in the U.S. or domestic businesses with activities outside the U.S.
A legal entity that is separate and distinct from its owners.
Corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes.
Limited Liability Company or LLC
A corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities.
The digital bookkeeping provides inputs on how to optimise taxes based on business types. For e.g. in many cases it makes more sense for a self-employed business to register as an S Corporation to reduce the tax outgo. The digital bookkeeping software can prepare all the required steps for filing taxes with the IRS as per the applicable business criterion.
An online software and managed services that help businesses with end to end compliance reporting have become an integral need. Companies can leverage digital bookkeeping services for accounting, payroll and compliance reporting, while they can focus on their core business.