MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu
Small Business Tips

Accounting services for your small business

Stephen Fishman
Tax expert and contributor MileIQ
February 5, 2020
Woman going through bills, looking worried

Download MileIQ to start tracking your drives

Automatic, accurate mileage reports.

Get Started

Running a business can be complicated. For a lot of people, it is especially true when it comes to tasks involving accounting and bookkeeping.  

Luckily, you don’t have to do everything yourself. You can hire an accountant to help you.

Here are some of the accounting and bookkeeping services accounting firms provide to small businesses.

Employee payroll

Whenever you hire an employee to work in your business, you become an unpaid tax collector for the government. You must comply with a myriad of federal, state, and local payroll tax requirements.

These include:

  • Properly determining the gross and net wages paid to each employee and accounting for them in your books
  • Determining how much tax to withhold from your employees’ paychecks
  • Paying the withheld tax, plus your employer contribution, to the IRS
  • Paying withheld state income tax to your state tax agency in the 43 states with income taxes
  • Paying federal and state unemployment taxes
  • Printing checks or making direct deposits of employee pay each pay period
  • Filing quarterly and annual employment tax returns
  • Issuing W-2 forms to employees
  • Filing 1099-MISC for independent contractors you hire
  • Updating retirement, vacation, sick pay, and other benefits earned by employees every pay period

It’s important to get payroll right. Failing to pay what you owe on time can get you in big trouble with the IRS and state tax authorities.  

Fortunately, you don’t have to do payroll yourself. An accounting service can perform all these payroll functions for you.

Taxes

Taxes are more complicated for business owners than for employees who work in businesses owned by others. In some cases, you have to prepare two tax returns.  

For example, you’ll need to file two returns if you form a corporation to own and operate your business. You’ll also need to file a separate return if you create a limited liability company with more than one owner or elect to have it taxed as a corporation.

A good accountant will help you prepare your business (and personal) tax return. Handling your tax return involves gathering all your expense and payment data and using it to complete the process.  

But, long before you prepare your return, an accountant will help you with tax planning. For example, an accountant can show you how to maximize your annual deductions and minimize your income by timing your expenses and billings.

Furthermore, an accountant can also show you how to save on taxes by forming a business entity such as a corporation.

Accounts receivable

Do you allow your clients or customers to buy your goods or services on credit? If so, you have “accounts receivable.”  

Accounts receivable, sometimes called “A/R,” is the accounting term for money owed you by your clients or customers.  

It’s important to track accounts receivable accurately. They represent money due from clients or customers.  

It’s also critical to send timely and accurate bills and invoices. If payment isn’t received on time, you need to follow up.  

Keeping track of accounts receivable also provides documentation supporting proof of your income at tax time.

Large businesses often have full-time staff to manage accounts receivable. Small business owners usually can’t afford this, so they have to outsource these tasks. An accountant can track and help collect your accounts receivable.

Download MileIQ to start tracking your drives

Automatic, accurate mileage reports.

Get Started

Accounts payable

Accounts payable result when your business buys goods or services on credit and receives an invoice (a bill). For example, you’ll have an account payable if you hire a web designer to upgrade your business website.

You record in your accounts payable liability account the amount of all invoices you receive. Later, when you pay the invoice, you subtract that amount from the accounts payable account. Your cash goes down by the same amount.

Sounds complicated? An accountant can do this work for you.

It’s essential to keep track of accounts payable and pay them on time. If you pay late, you’ll often have to pay a penalty or interest. Late payments can also adversely affect your business’s credit rating.

By the way, paying bills early can qualify your business for discounts.

Business bank reconciliation

Your business should have a dedicated checking account. Don’t use your personal checking account for business. The idea is to deposit all the money your business earns in your business account. When you spend money that’s business-related, you take it from the business account.

Each month your bank sends you a bank statement. This statement shows all the activity in the account the prior month. This monthly transaction record includes checks you wrote, deposits, electronic transactions and service charges.

Moreover, it’s crucial to do a bank reconciliation. In other words, a fancy term for balancing your checkbook.

Reconciling involves verifying that the amounts shown on your bank statement are consistent with the numbers shown in your books. A bank reconciliation is often a complicated, time-consuming process.

You need to go through each transaction individually. If there’s a difference between the bank’s statement and your accounting records, you need to figure out the reason. Frankly, this task is better suited for a professional.

Performing a bank reconciliation assures you that neither you nor your bank made an error. Otherwise, you might think you have more cash than what’s in the account. Mistakes like this could result in bounced checks. At a minimum, your accountant should conduct a bank reconciliation shortly after the end of each month.

Credit card management

Credit cards help you manage your expenses against your cash flow. They make it easy to purchase items for your business immediately. However, this can lead to problems if you spend too much.

An accountant will monitor your business credit card balances and make sure you pay on time.  

It is imperative to establish a business credit history that is separate from your personal credit. Your accountant will monitor your business credit and report actions to business credit bureaus. Staying on top of your credit card activity is important to maintain good credit.

Finding an accountant or bookkeeper

You can hire a local accounting firm to provide you with these services. Alternatively, there are nationally based accounting services that you can access online. These are often cheaper than local accounting firms, but you won’t have any face-to-face interaction with them.

Still tracking miles by hand?

Use MileIQ to automatically keep a full, IRS friendly mileage log.

Get Started

Related Blog Posts

Self Employed

Home office tax deduction for small businesses

The home office deduction is a valuable tax deduction for small businesses and freelancers. Learn how to calculate this massive write-off.

Taxes

Deducting parking expenses on your taxes

Deducting parking on your taxes can save you money. Here's how to do it when you're self-employed and a W2 worker.

Small Business Tips

20% pass-through deduction for small business owners

The Section 199A deduction for small business owners lets you deduct 20% of your income. See if you qualify for this pass-through deduction.

Taxes

How to pay your estimated taxes

Pay your estimated taxes or you could wind up in trouble with the IRS. Here's what you should know about your payment options.

Waitress accepting a credit card payment from her customer inside the restaurant
Small Business Tips

How to accept credit cards at your small business

Cash is no longer king. Here’s a beginner’s how to guide to set up credit card processing for your digital and brick and mortar small business.

Small Business Tips

15 basic business terms every entrepreneur should learn

This primer will walk you through the basic business terms in easy-to-understand ways. Learn the importance of ROI, profit margin, equity, and more.

MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

Running a business can be complicated. For a lot of people, it is especially true when it comes to tasks involving accounting and bookkeeping.  

Luckily, you don’t have to do everything yourself. You can hire an accountant to help you.

Here are some of the accounting and bookkeeping services accounting firms provide to small businesses.

Employee payroll

Whenever you hire an employee to work in your business, you become an unpaid tax collector for the government. You must comply with a myriad of federal, state, and local payroll tax requirements.

These include:

  • Properly determining the gross and net wages paid to each employee and accounting for them in your books
  • Determining how much tax to withhold from your employees’ paychecks
  • Paying the withheld tax, plus your employer contribution, to the IRS
  • Paying withheld state income tax to your state tax agency in the 43 states with income taxes
  • Paying federal and state unemployment taxes
  • Printing checks or making direct deposits of employee pay each pay period
  • Filing quarterly and annual employment tax returns
  • Issuing W-2 forms to employees
  • Filing 1099-MISC for independent contractors you hire
  • Updating retirement, vacation, sick pay, and other benefits earned by employees every pay period

It’s important to get payroll right. Failing to pay what you owe on time can get you in big trouble with the IRS and state tax authorities.  

Fortunately, you don’t have to do payroll yourself. An accounting service can perform all these payroll functions for you.

Taxes

Taxes are more complicated for business owners than for employees who work in businesses owned by others. In some cases, you have to prepare two tax returns.  

For example, you’ll need to file two returns if you form a corporation to own and operate your business. You’ll also need to file a separate return if you create a limited liability company with more than one owner or elect to have it taxed as a corporation.

A good accountant will help you prepare your business (and personal) tax return. Handling your tax return involves gathering all your expense and payment data and using it to complete the process.  

But, long before you prepare your return, an accountant will help you with tax planning. For example, an accountant can show you how to maximize your annual deductions and minimize your income by timing your expenses and billings.

Furthermore, an accountant can also show you how to save on taxes by forming a business entity such as a corporation.

Accounts receivable

Do you allow your clients or customers to buy your goods or services on credit? If so, you have “accounts receivable.”  

Accounts receivable, sometimes called “A/R,” is the accounting term for money owed you by your clients or customers.  

It’s important to track accounts receivable accurately. They represent money due from clients or customers.  

It’s also critical to send timely and accurate bills and invoices. If payment isn’t received on time, you need to follow up.  

Keeping track of accounts receivable also provides documentation supporting proof of your income at tax time.

Large businesses often have full-time staff to manage accounts receivable. Small business owners usually can’t afford this, so they have to outsource these tasks. An accountant can track and help collect your accounts receivable.

Accounts payable

Accounts payable result when your business buys goods or services on credit and receives an invoice (a bill). For example, you’ll have an account payable if you hire a web designer to upgrade your business website.

You record in your accounts payable liability account the amount of all invoices you receive. Later, when you pay the invoice, you subtract that amount from the accounts payable account. Your cash goes down by the same amount.

Sounds complicated? An accountant can do this work for you.

It’s essential to keep track of accounts payable and pay them on time. If you pay late, you’ll often have to pay a penalty or interest. Late payments can also adversely affect your business’s credit rating.

By the way, paying bills early can qualify your business for discounts.

Business bank reconciliation

Your business should have a dedicated checking account. Don’t use your personal checking account for business. The idea is to deposit all the money your business earns in your business account. When you spend money that’s business-related, you take it from the business account.

Each month your bank sends you a bank statement. This statement shows all the activity in the account the prior month. This monthly transaction record includes checks you wrote, deposits, electronic transactions and service charges.

Moreover, it’s crucial to do a bank reconciliation. In other words, a fancy term for balancing your checkbook.

Reconciling involves verifying that the amounts shown on your bank statement are consistent with the numbers shown in your books. A bank reconciliation is often a complicated, time-consuming process.

You need to go through each transaction individually. If there’s a difference between the bank’s statement and your accounting records, you need to figure out the reason. Frankly, this task is better suited for a professional.

Performing a bank reconciliation assures you that neither you nor your bank made an error. Otherwise, you might think you have more cash than what’s in the account. Mistakes like this could result in bounced checks. At a minimum, your accountant should conduct a bank reconciliation shortly after the end of each month.

Credit card management

Credit cards help you manage your expenses against your cash flow. They make it easy to purchase items for your business immediately. However, this can lead to problems if you spend too much.

An accountant will monitor your business credit card balances and make sure you pay on time.  

It is imperative to establish a business credit history that is separate from your personal credit. Your accountant will monitor your business credit and report actions to business credit bureaus. Staying on top of your credit card activity is important to maintain good credit.

Finding an accountant or bookkeeper

You can hire a local accounting firm to provide you with these services. Alternatively, there are nationally based accounting services that you can access online. These are often cheaper than local accounting firms, but you won’t have any face-to-face interaction with them.

Get started for free