Running a small business is a lot of work, and it’s easy to let financial tasks fall by the wayside. By completing the following six accounting tasks quarterly, you’ll be more prepared come tax season.
Review payroll reports
Collect any documents you need to review your payroll, like time sheets, deductions, bonuses, and tax forms. From there, you can compare gross pay, net pay, taxes, and benefits for each employee.
As you review your payroll reports, look for inconsistencies or errors in your records and document any adjustments you make. You can use payroll software to reconcile your data. The right software can also help you monitor your performance and streamline your operations.
[Read more: What to Look for in a Payroll Software]
Make your estimated federal payments
Sole proprietors, partners, and S corporation shareholders must make quarterly estimated tax payments if they expect to owe more than $1,000 when filing their tax returns. Corporations that expect to owe over $500 are required to make estimated payments.
You’ll determine your estimated taxes by looking at your adjusted gross income, taxable income, taxes, deductions, and credits for the year. You can use the worksheet in Form 1040-ES to determine your estimated taxes, or your accountant can tell you what you owe.
Estimating your income as accurately as possible will help you avoid penalties for underpaying. When you’re ready to pay, you can pay by mail, online, or over the phone.
[Read more: What Are Estimated Tax Payments For Businesses?]
Review your accounts receivable
Every quarter, you should take some time to assess and follow up on any outstanding invoices. Staying on top of your accounts receivable will help you avoid cash flow issues and minimize potential losses. And it helps investors get a better sense of your company’s overall financial stability.
To get started, you can group your customers into different risk groups. The easiest way to evaluate your accounts receivable is with the receivable-to-sales ratio. You take your total accounts receivable and divide them by your sales. The higher this number, the more trouble your business has collecting payment from its customers.
Regularly backing up your data is the best way to protect sensitive business information from loss due to hackers or natural disasters.
Review your inventory
Inventory management is a key element of a business’s profitability. If your business is chronically understocked, you’ll drive your best customers away. But if you order too much inventory, you may experience cash flow problems.
It’s helpful to start by categorizing your inventory into three different groups. The first group is for high-ticket items that don’t sell as frequently, so you need fewer on hand. The next group is for inexpensive items that tend to sell quickly — you’ll want more of these items in stock. Finally, you’ll group together all the items that fall somewhere in the middle.
Audit all your inventory to ensure the items you have on hand match what’s in your system. You should also take some time to evaluate your suppliers and see if any are causing problems for your business.
[Read more: Inventory Management Challenges and Tips for Small Businesses]
Pay state taxes
Most businesses have to pay state taxes in addition to federal taxes. Depending on the type of business you run, you may have to pay franchise taxes, sales taxes, and employment taxes.
Your state taxes will also vary depending on where your business and inventory is located. It’s a good idea to work with an accountant to determine your tax responsibilities.
Back up your data
Regularly backing up your data is the best way to protect sensitive business information from loss due to hackers or natural disasters. To develop a data backup plan, you can start by identifying what information is necessary for your business to operate.
From there, you should identify a way to keep your data backups restricted from staff members and located separately. For example, you can back up your data using cloud storage solutions, data backup software, or an external hard drive. If you have a lot of data to back up, consider working with a service provider to manage it for you.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
