Essentials Every Business Owner Should Know to Prepare for Tax Season
Lisa Nguyen, CPP, CPB | Owner of Smart Bean, Inc.
(Bookkeeping, Sales Tax, Reporting & Personal Financials expert in Tustin, CA)
At the start of 2020 (before the world changed), Bassman Blaine hosted an industry seminar at our headquarters & corporate showroom in Irvine, CA on the best bookkeeping practices for running a small business. With 2021 now in full swing, we thought what better way to prepare for the year ahead than by bringing back some of the information presented by Lisa Nguyen, CPP, CPB, founder and CEO of SmartBean. Lisa specializes in helping entrepreneurs such as Interior Designers.
During our seminar, Lisa covered an array of bookkeeping matters, including account reconciliation, budgeting, controls and processes, and how to avoid overpaying sales tax. Lisa also gave emphasis to the 3 C’s of bookkeeping every small business owner should be aware of… do you know what they are?
WHAT YOU WILL LEARN:
- What You Should Know, Do & Avoid for Bookkeeping
- The 3 C’s Of Bookkeeping
- Best Practices for Payroll
- BONUS: 2020 Year-End Prep for Interior Designers (PPP & CARES Act)
What you should KNOW
As the founder and owner of your business, how you choose to go about doing your books is entirely up to you. For all new and existing bookkeeping processes, Lisa details three key essentials to keep in mind as you record and organize the day-to-day financial transactions of your business. She states you must always know your fixed expenses, gross profit margin and product mark-up.
What you should DO
Lisa explains proper bookkeeping practices every business owner should implement, such as monthly reconciliations, allocating finances for sales tax payable, and routinely record expenses that were paid with cash or personal accounts.
What you should AVOID
After sharing advice on the best practices to apply, Lisa touches on the actions you should avoid, listing some of the most common bookkeeping pitfalls. Mishandling sales taxes, co-mingling funds, and having any uncategorized items are concepts that can be considered mistakes and fails when approaching your company finances.
The 3 C’s of Bookkeeping
When looking at your bookkeeping system, Lisa says if your methods can “pass” all three of these C’s, you are on the right track:
- Consistency in keeping up with the data as often as you can
- Control of your own books, meaning knowing your numbers, and having access to all of your information at all times
- Convenience in your system that makes it easy for you, where it is not grueling for you to keep up with
Best Practices for Payroll: Employee vs Contractor
Beginning with tax year 2020, the IRS requires that independent contractor income be reported on the new form 1099-NEC (previously these earnings were reported on Form 1099-MISC). Learn the difference between a 1099 employee (contracted) than a W-2 employee and what is best for your design business. Reach out to SmartBean® if you do not have a payroll company handling your Form 1099 reporting obligations. Freelancers and subcontractors who received $600 or more from your company last year must receive Form 1099-NEC by January 31, 2021.
Learn more from Lisa regarding 1099: https://www.youtube.com/watch?v=AqtyhC_i6is
2020 Year-End Prep for Interior Designers
Lisa discusses topics unique to 2020 such as the Pay Protection Program (PPP) and other emergency stimulus programs and grants that were available to help small business owners navigate the turmoil of these last few months…it’s absolutely critical that your bookkeeping entries are correctly recorded if you took advantage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Watch the Full Seminar: Best Bookkeeping Practices For Running a Small Business
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