So tax year 2009 is over.  Hopefully you got your return completed and filed on time.  Now is the perfect time to asses how your tax time went this year and to determine what you need to do to improve your book and record keeping processes so that the next tax year is much smoother and easier.   Here are some common bookkeeping errors that can make a big difference not only in your tax time peace of mind but also in the ultimate success of your business or home:

1.  Keep your receipts – many small businesses only keep receipts for items that are $75 or more, but you will probably claim deductions for items of smaller amounts.  It is wisest to keep all receipts at least for the entire year but permanently with your tax files if they document tax related expenses and deductions.

2. Make sure you have back-up – there is no paperless office in the world yet.  You will want to document and make copies of everything that goes through your office – this will be especially important if you are audited.  Copies of all invoices, bills, statements, payments, deposit slips, etc.

3. Reconcile each month – reconcile your bank statements with your books EACH MONTH so you know where you stand financially and aren’t surprised by unexpected overdrafts.  This is done easily if you have some kind of bookkeeping software, but if you find you just don’t have the time, then…

4. Hire a professional – especially if you have a small business to keep track of.  Many small businesses make the mistake of trying to do their bookkeeping in-house to save money.  Many lack the expertise and knowledge to do it properly and so it ends up costing them more in mistakes, bank fees, etc.  Proper communication with your bookkeeper is critical – make sure you supply them with copies of all income and expense related information on at least a monthly basis.  In turn, make sure you request at least quarterly updates and reports.

If Cloe Sill Bookkeeping and Tax Services can help you in any way set up a more productive bookkeeping system for 2010, please feel free to contact our office.