The importance of accurate and timely bookkeeping cannot be stressed enough. When a self-employed person shows up with receipts or a list and the numbers are rounded to the nearest $50 or $100, I know their bookkeeping is not in the best shape.
Keeping good books is important for so many reasons and involves making sure your income on your taxes matches your bank statements, accurately tracking expenses so that you get all of the deductions you deserve, being able to prove your business purchases to the IRS in an audit, tracking money paid to sub-contractors for 1099 reporting at year end, and accurately tracking sales tax if applicable.
There are several bookkeeping programs, both online and desktop based, that can help you achieve good bookkeeping. Quickbooks is the most popular but Xero and Wave are online options gaining popularity in that market.
The most accurate bookkeeping happens when your bank statements match your tax return and your sales tax returns (if applicable). That means your income (both business and personal) is recorded in accounting software accurately and matches the deposits on your bank statements. Recording your expenses and reconciling them to your bank statements is helpful because it ensures that every deduction is maximized and categorized. It also ensures that the purchase of equipment is captured and loan payments recorded.
We can help you with bookkeeping and teach you how to do it yourself. Regardless of which route you take, you will benefit from solid record keeping.