As a small business owner, you probably wear many hats, one of which is bookkeeping. It can be a daunting task, especially if you don't have a background in accounting. However, bookkeeping mistakes can be costly, and even lead to financial chaos. In this blog, we'll discuss five common bookkeeping mistakes and provide tips on how to avoid them.
At Catching Numbers Inc, we specialize in providing bookkeeping services to small businesses. Contact us today to learn more about how we can help you avoid these common mistakes and stay on top of your finances. 1. Not keeping receipts and records: One of the most common bookkeeping mistakes is not keeping receipts and records. This can lead to inaccurate financial reports, missed deductions, and even legal trouble if you're audited. To avoid this, make sure to keep all receipts and records organized and up to date. You can use cloud-based software to keep everything in one place and easily accessible. At "Catching Numbers Inc", we can help you set up a system for organizing your receipts and records, and ensure that your financial reports are accurate and up to date. 2. Mixing personal and business finances: Mixing personal and business finances is a common mistake that can make bookkeeping a nightmare. This can lead to a lack of clarity on business expenses, missed deductions, and a distorted view of your business's financial health. To avoid this, open a separate bank account for your business, use a separate credit card for business expenses, and avoid using personal funds for business expenses. 3. Not reconciling accounts regularly: Failing to reconcile your accounts regularly is another common bookkeeping mistake. Reconciliation ensures that your records match your bank statements and helps you identify discrepancies or errors. To avoid this, reconcile your accounts on a monthly basis and investigate any discrepancies as soon as possible. 4. Forgetting to record all expenses: It's easy to forget to record expenses, especially small ones like coffee or parking fees. However, these small expenses can add up and impact your financial reports. To avoid this, keep a log of all expenses, no matter how small. You can also use a mobile app to track expenses on the go. 5. Not categorizing expenses correctly: Categorizing expenses incorrectly can lead to inaccurate financial reports and missed deductions. For example, if you categorize a business expense as personal, you may miss out on a deduction that could save you money. To avoid this, make sure to categorize expenses correctly and consistently. You can also use software that can learn from your categorization habits to automate the process. Bookkeeping may not be the most exciting part of running a business, but it's essential for your financial health. By avoiding these common bookkeeping mistakes, you can ensure that your records are accurate and up to date, and have a better understanding of your business's financial health. At Catching Numbers Inc, we specialize in providing bookkeeping services to small businesses. Contact us today to learn more about how we can help you avoid these common mistakes and stay on top of your finances. Also, be sure to check out our blog post on Why Cloud is our Preferred Method for more information on how to streamline your bookkeeping processes and improve your financial reporting. 1. "10 Common Bookkeeping Mistakes to Avoid for Small Business Owners": A blog post by Bench that provides additional insight into common bookkeeping mistakes and how to avoid them. [https://bench.co/blog/bookkeeping/common-bookkeeping-mistakes/] 2. "5 Bookkeeping Best Practices for Startups and Small Businesses": A blog post by NerdWallet that provides practical tips for small business owners looking to manage their own bookkeeping. [https://www.nerdwallet.com/article/small-business/bookkeeping-best-practices-for-startups-and-small-businesses]www.nerdwallet.com/article/small-business/bookkeeping-best-practices-for-startups-and-small-businesses
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As a small business owner, you may have chosen to structure your business as an S corporation, which offers tax advantages and other benefits. However, navigating the tax requirements for S corporations can be complex, and you may find that you need additional time to prepare your tax return. If that's the case, filing an extension for your S corp tax return can give you the extra time you need to ensure that your taxes are prepared correctly and filed on time.
To help you better understand the process of filing an extension for your S corp tax return, we've put together this guide with everything you need to know. What is an S Corp Extension? An S Corp extension is a request for additional time to file your S corporation tax return. The extension gives you an additional six months to file your return, which means you'll have until September 15th to file instead of the usual March 15th deadline. It's important to note that while the extension gives you extra time to file your return, it doesn't give you extra time to pay your taxes. Any taxes owed are still due by the original deadline of March 15th. How to File an S Corp Extension? To file an S corp extension, you'll need to complete and file Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. You can file this form electronically or by mail, and you must file it by the original due date of your S corporation tax return. If you file your extension request electronically, you'll receive an acknowledgement from the IRS when your request is received. If you file by mail, you'll need to ensure that your request is postmarked by the original due date of your tax return. Why You Might Need to File an S Corp Extension? There are several reasons why you might need to file an S corp extension. For example, you might need extra time to gather all of the information and documentation needed to complete your tax return accurately. Or, you might need extra time to work with a tax professional or accounting firm like Catching Numbers Inc, to ensure that your taxes are prepared correctly and filed on time. Working with a professional accounting firm like Catching Numbers Inc can be especially beneficial for small business owners who are managing the finances of their business on their own. Catching Numbers Inc can provide valuable assistance with bookkeeping, payroll processing, and tax preparation, and can help ensure that your S corporation tax return is filed correctly and on time. Deadlines to Keep in Mind To avoid penalties and interest, it's important to keep these deadlines in mind:
Contact Catching Numbers Inc for Help Filing an S Corp Extension If you're a small business owner who needs help filing an S corp extension, Catching Numbers Inc can help. Their team of experienced accounting professionals can provide the guidance and support you need to prepare your taxes accurately and file your extension request on time. To learn more about Catching Numbers Inc and their services, visit their website at https://catchingnumbers.com/. You can also get in touch with their team by visiting their "Contact Us" page at https://catchingnumbers.com/contact-us or by calling (604) 450-8036. Don't let the stress of tax season get the best of you. With the right support and guidance, you can ensure that your S corporation tax return is filed accurately and on time. Contact Catching Numbers Inc today to learn more about how they can help you file an extension and manage your business finances. We hope you find this blog post helpful in understanding the process of filing an S Corp extension and the benefits of working with a professional accounting firm like Catching Numbers Inc. If you have any questions or would like to learn more about how Catching Numbers Inc can help you with your S Corp extension, don't hesitate to reach out to our team. Remember, filing an S Corp extension can give you the extra time you need to ensure that your taxes are prepared accurately and filed on time. By working with a professional accounting firm like Catching Numbers Inc, you can have peace of mind knowing that your taxes are in good hands. Contact them today to learn more about their services and how they can help you manage your business finances. External Links: 1. IRS Form 7004: Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns - https://www.irs.gov/forms-pubs/about-form-7004 2. Accounting Today - https://www.accountingtoday.com/tag/s-corporations When starting a new business, one of the most important decisions to make is the type of business entity to form. Two of the most popular options are the S corporation and the C corporation. Each has its unique advantages and disadvantages, and it's essential to choose the one that best suits your business. In this post, we'll explore the differences between S corps and C corps to help you make an informed decision.
What is an S Corporation? An S corporation, or Subchapter S corporation, is a type of corporation that's taxed as a pass-through entity. This means the company's income, deductions, and credits pass through to the shareholders who report them on their individual tax returns. By doing this, S corporations avoid double taxation that C corporations are subject to. To qualify for S corporation status, a company must meet specific requirements, including having no more than 100 shareholders and only issuing one class of stock. S corporations are commonly used by small businesses and startups because they provide the protection of a corporation while avoiding double taxation. What is a C Corporation? A C corporation, or regular corporation, is a separate legal entity taxed as a separate entity from its shareholders. This means the company's profits are subject to corporate income tax, and if the profits are distributed to shareholders as dividends, they are also subject to individual income tax. C corporations don't have the same limitations as S corporations and can have an unlimited number of shareholders and multiple classes of stock. They're usually used by larger businesses that need access to more funding and plan to go public in the future. Differences Between S Corporations and C Corporations Taxation: The most significant difference between S corporations and C corporations is how they're taxed. S corporations avoid corporate income tax, and their profits pass through to the shareholders who pay individual income tax on their share of the income. C corporations, on the other hand, are subject to corporate income tax, and their shareholders pay individual income tax on any dividends they receive. Ownership: S corporations are limited to 100 shareholders and can only issue one class of stock. C corporations can have an unlimited number of shareholders and multiple classes of stock. Corporate Formalities: C corporations are required to hold annual shareholder and director meetings and keep minutes of those meetings. They must also file an annual report with the state in which they're incorporated. S corporations aren't subject to the same requirements, making them a more attractive option for small businesses. Liability: Both S corporations and C corporations offer liability protection for their owners, meaning that the owners' personal assets are protected from business debts and legal actions. Which One is Right for Your Business? The decision between an S corporation and a C corporation ultimately depends on the needs and goals of your business. If you're a small business or startup that doesn't plan to go public and has less than 100 shareholders, an S corporation may be the best choice for you. On the other hand, if you're a larger business that plans to go public or needs access to more funding, a C corporation may be a better fit. It's crucial to consult with a tax professional or business attorney to help you make the right decision for your business. They can help you navigate the legal and tax implications of each option and determine which one is the best fit for your unique situation. If you need help with tax planning, financial reporting, or other accounting services, contact Catching Numbers Inc, a reliable accounting firm that can help you optimize your financial operations. For more information on S corporations and C corporations, please visit the following resources: External links:
Disclaimer: The information provided in this blog is for educational purposes only and is not intended to constitute legal, financial, or tax advice. Every business owner's situation is unique, and you should always consult with a licensed professional before making any financial or legal decisions. The information provided in this blog is accurate to the best of our knowledge, but it may not be applicable to your specific circumstances. As such, the information should not be relied upon without seeking professional advice. As a business owner, it's important to understand the difference between owner's draw and salary. While both options allow you to take money out of your business, they have different tax implications and can affect your financial statements differently.
What is an Owner's Draw? An owner's draw is a distribution of profits that you take as the owner of the business. This money is taken out of your business's equity account and is not considered a business expense. Owner's draws are not subject to payroll taxes and do not need to be reported on your personal tax return as income. However, be cautious of taking too much money out of your business through owner's draws, as it can deplete your company's cash reserves and limit your ability to invest in growth. What is a Salary? A salary is a regular payment that you receive as an employee of your business. Unlike owner's draws, salaries are subject to payroll taxes and must be reported as income on your personal tax return. This means you'll need to withhold federal and state income tax, as well as Social Security and Medicare taxes, from your paycheck. A salary provides a consistent income stream and ensures you're paying into Social Security and Medicare, which can help you qualify for benefits in the future. Which Option is Best for You? The answer to this question depends on your specific situation. If you need a regular income stream and want to pay into Social Security and Medicare, taking a salary may be the best option. If you're in a position to take money out of the business as profits and don't want to deal with payroll taxes, owner's draws may be the better choice. Regardless of which option you choose, it's essential to document your withdrawals carefully. This will help you keep track of your personal income and your business's financial performance and make tax season easier. At Catching Numbers Inc, we understand the importance of proper financial management for small businesses. Our team of experienced accountants can help you navigate the complexities of owner's draws, salaries, and other financial matters. Contact us today to learn more about how we can help your business thrive. In conclusion, both owner's draws and salaries have their advantages and disadvantages. By understanding the differences between the two, you can make informed decisions about how to pay yourself and manage your business's finances. Disclaimer: The information provided in this blog is for educational purposes only and is not intended to constitute legal, financial, or tax advice. Every business owner's situation is unique, and you should always consult with a licensed professional before making any financial or legal decisions. The information provided in this blog is accurate to the best of our knowledge, but it may not be applicable to your specific circumstances. As such, the information should not be relied upon without seeking professional advice. Here are a few specific external links that may be helpful for readers interested in learning more about owner's draw and salary for small business owners:
Filing taxes can be a daunting task for many people, and sometimes it can be difficult to meet the deadline. If you find yourself in a situation where you need more time to prepare your tax return, you can file for an extension. Here's what you need to know about filing an extension for your 2022 taxes.
Know the Deadline for Filing an Extension The deadline for filing your 2022 taxes is April 18, 2023. If you need more time to file your taxes, you can file for an extension until October 17, 2023. It's important to note that while an extension gives you more time to file your tax return, it does not extend the deadline for paying any taxes owed. File for an Extension Using Form 4868 To file for an extension, you need to submit Form 4868, which is the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file this form electronically or by mail. If you choose to file electronically, you can do so using tax software or by using the IRS's Free File program. To file by mail, you'll need to print out Form 4868 and mail it to the appropriate address. The IRS has different addresses for different states, so make sure you send it to the correct one. Estimate Your Taxes When filing for an extension, you'll need to estimate the amount of taxes you owe. If you're not sure how much you owe, you can use the information from your previous year's tax return as a guide. Keep in mind that if you underestimate the amount you owe, you could be subject to penalties and interest. Pay Any Taxes Owed Filing an extension does not extend the deadline for paying any taxes owed. If you think you will owe taxes, it's important to pay as much as you can by the April 18 deadline to avoid penalties and interest. If you can't pay the full amount, you can set up a payment plan with the IRS. Prepare and File Your Tax Return Once you've filed for an extension, you'll have until October 17, 2023 to prepare and file your tax return. It's important to note that while an extension gives you more time to file your return, it does not extend the deadline for paying any taxes owed. If you owe taxes, you'll still need to pay them by the April 18 deadline to avoid penalties and interest. If you need assistance filing Form 4868 or estimating your taxes, Catching Numbers Inc can help. Our team of experienced tax professionals can guide you through the process and ensure that your extension is filed accurately and on time. In conclusion, filing an extension for your 2022 taxes can be a straightforward process. By using the IRS's Free File program, filing Form 4868, estimating the amount of taxes owed, paying any taxes owed, and preparing and filing your tax return by the October 17 deadline, you can avoid penalties and interest. If you're not sure how to proceed, consider consulting with a tax professional or contacting the IRS for guidance. External Links:
We are often asked why we choose cloud based accounting software such as Xero, Quickbooks and Wave Apps for our customers rather than traditional desktop based software and ERPs. Our decision surprised many of our peers. They’d never heard of cloud based applications and wondered why we didn’t just use the desktop accounting application everyone is using and why carry the risk of putting accounting data on the cloud?
We thought it would be useful to our clients to lay out some of our favorite features and benefits of cloud accounting.
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