Bookkeeping and Tax Tips for Small Businesses

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One thing I have noticed as a bookkeeper is that business owners often jump into a new platform or revenue stream, without thinking about the tax and bookkeeping consequences first. This is understandable, especially since business owners are often creative individuals focused on revenue generation not on administration.

However, for those who are interested in saving some bookkeeping headaches and some money, here are some things you can do.

• Use separate bank accounts and credit cards for your business (separate from personal).
• Avoid PayPal if you can help it, but if you do use PayPal, use a business PayPal account for business only transactions.
• Use PayPal to pay contractors, this way you won’t have to 1099 the contractor, PayPal will. (This is the one exception where using PayPal can make your life easier.)
• If you are selling on Shopify, only accept Shopify Payments and Shopify Installments. Don’t accept PayPal, Klarna, Apple Pay, AfterPay, etc. The more payment options you allow, the more complicated your Shopify bookkeeping will be. (Shopify bookkeeping is already no picnic!)
• Use QuickBooks to invoice your wholesale customers. It’s really easy to match the payment to the invoice if both are handled through QuickBooks.
• Don’t use QuickBooks to invoice retail customers. QuickBooks will force you to use their Sales Tax Center for these transactions, and it’s a nightmare to work with.
• Use Square to accept payments from your retail customers, and use the Connect to Square App in QuickBooks to make matching the deposits to the payments easy.
• Sell on marketplaces (Etsy, Amazon, etc.) if you don’t want a big sales tax hassle.
• Use TaxJar if you open your own shop on Shopify and must hassle with sales tax.

Just because these suggestions may save you hassle and money, it doesn’t mean you should necessarily do them all. Sometimes it’s worth the complications to earn more money. Do what’s right for your business overall!

Small Business Updates and Tools

Tax Forms

Tying out your 1099s to your bookkeeping records is not always a walk in the park. I have some tutorial videos that may help you with your Etsy, Amazon, and Shopify 1099s. Keep in mind that any 1099 you receive is mostly likely before refunds. In addition, sometimes sales tax collected is included in the 1099 and sometimes it is not. Hopefully those tips are helpful!

Tax Returns

If this is your first time filing taxes as a business owner, have no fear. It won’t be too bad! If you have completed your personal tax returns in the past, adding on your sole proprietorship or single member LLC will not be too tough at all! You will do your taxes as normal and then include a Schedule C for your business. TurboTax is a great resource to walk you through all the information you need to file your tax return. You will answer a couple of questions and fill in the numbers from your bookkeeping.

Featured Business

Tax season is upon us. 🙈 To help you prepare, this newsletter is sponsored by my tax guides.

​The Etsy Seller's Simple Guide to Taxes​

​The Blogger's Simple Guide to Taxes​

​The VA Tax Guide​

If you're interested in getting your business in front of potential customers and clients, please fill out this form.

On a Personal Note

We had a bout of Covid run through our house recently, but thankfully we are all recovering nicely and starting back into normal activities. I suppose if you have to be sick, the winter is the time to do it when you just want to cozy up with a good book or a good movie anyway!

Talk soon!

Sarah