Hey! Small business owners! I see you out there wearing all the hats, doing all the things , working hard to grow your businesses. This list is designed with you in mind to help you get back some of the time and money you need and deserve. Here are 3 tips to help you streamline some of your key business processes.
Tip #1 – Receipts
Having an efficient receipt handling process during the year saves you time and frustration come tax time. Further, it better ensures you have all your receipts and can take advantage of every single deduction.
The IRS likes you to provide “adequate evidence” of your business expenses. This means showing the amount, date, place, what was purchased, purpose of the expense, and who may be included on the expense (like if you paid for your client’s meal). So, maintain copies (paper and/or digital) of ALL business receipts. In an audit situation, not having these documents could cost you.
First, I suggest business owners start with a simple system old-school system of keeping up with their paper receipts. This keeps them organized for later. The following 24 Pocket Expanding File Folder* is one I use myself. Use each folder for a different month. This makes the task of finding the one you need a little easier.
If handling and storing all that paper makes you cringe, there is help. Apps like Expensify ($4.99-$9 per month) or the companion apps to QuickBooks and Xero allow you to capture receipt images and their details and upload them directly to the bookkeeping software. There they are stored until you need them. Check their sites directly for current plans and pricing.
Tip #2 – Track your travels
With the standard mileage rate at $0.58 per mile (2019 rate) tracking your business travels could mean a significant deduction at the end of the year, so track those miles! But, do it properly. As with receipts, this means having “adequate evidence.” The IRS likes to see dates, destinations, business purpose, the beginning and ending odometer readings on your car, and miles traveled. Whew! This is a lot. In the “olden” days, before technology ruled, business owners needed to carry around a log book and write all this stuff down. Who has time for that?
Today, there are apps to help. I use MileIQ (Free- $5.99/month). It logs the miles as well as the location information. You just input your odometer readings at the beginning and end of the year. Trips are easy to categorize with a swipe. Just remember to remove any trips taken when you are not traveling in the vehicle you use for business. Otherwise, it will log those miles to your “business” car as well. Other notable mileage tracking apps include Expensify, QuickBooks Self Employed and Hurdlr. Check their sites for current plans and pricing details.
Tip #3 – Get paid on time
Invoicing and chasing payments can be a major drain on your time and energy. By simplifying and optimizing how you request and receive payments you can save time and frustration and keep your cash flowing positively.
- Simplify the payment process by sending electronic invoices and by automating monthly invoicing . Electronic and automated payment options exist in most all bookkeeping software and can be found within other tools such as CRMs and some calendar apps (Calendly) as well. These options can be integrated into websites, and invoices can be emailed and sent from your mobile phone. This makes requesting payments simple and easy for you, the business owner. And, it makes submitting payments simple and easy for your clients and customers. Win-Win.
- Determine your payment policies and terms up front. Whether you require payment initially or allow your customers to make final payments in 60 days, figure this out before the transaction. Next, communicate your policies for paying on time, and especially for paying late. You might also consider adding a policy for early payment, providing an incentive to customers and clients who decide to pay you earlier. This is important because the longer it takes your clients and customers to pay you, the less money you have in your business to run your business.
- Review your receivables (outstanding payments due to you from another person or business) MONTHLY! I have taken over bookkeeping for organizations who owed their vendors money for over 60+ days. While they should have caught this, it wasn’t adversely affecting their operations as they still held the cash. However, it was adversely affecting their vendor’s cash flow because they had not been paid. This can add up over time and cause critical cash flow issues. So, keep track of your receivables, follow up as needed, enforce your payment policies, and pursue legal action as necessary to collect your payments.
Now, go forth and implement and get some of your time and money back.
To your business’s success!
If you have questions on how to implement any of the above strategies, or with anything related to your business’s finances or streamlining operations, we are here to help. Schedule a complimentary Discovery Call today.