What Every New Business Owner Should Be Tracking

Starting a business is exciting. You’re focused on finding customers, making sales, building your reputation, and figuring out what comes next.

Bookkeeping? That may not feel quite as exciting.

But developing good bookkeeping habits from the beginning can save you time, money, and frustration later. It also gives you a much clearer picture of how your business is actually performing.

At Gleason Tax Advisory, we encourage new business owners to create a simple system for tracking their finances from day one. Here are some of the most important things to include.

1. Track Your Mileage

If you use your personal vehicle for business purposes, start keeping a mileage log.

Don’t rely on trying to reconstruct your trips at tax time. Keep track throughout the year, including the date, business purpose, destination, and business miles driven.

Depending on your situation, vehicle expenses may qualify for a business deduction. Good records are essential for determining what may be deductible and documenting the expense if questions arise later.

2. Keep Your Receipts

Business lunches, advertising, office supplies, postage, software, professional fees, equipment—the expenses can add up quickly.

Keep receipts and supporting documentation for your business purchases and develop a consistent system for organizing them. Digital copies can make this much easier than keeping a shoebox full of paper until tax season.

Your records should help show what you purchased, how much you paid, when you purchased it, and its business purpose.

Tracking expenses throughout the year also helps you understand where your money is going. If you’ve set a budget for something like advertising, for example, good bookkeeping makes it much easier to see whether you’re staying on track.

3. Document Your Home Office

Are you running your new business from home?

Don’t automatically assume that working at your kitchen table means you qualify for a home-office deduction. Specific requirements apply.

If you believe you may qualify, keep records of your workspace and related household expenses. The tax treatment will depend on your individual circumstances and how the space is used.

This is something worth discussing with your tax professional early rather than trying to figure it out months later.

4. Prepare for Estimated Taxes

One of the biggest adjustments for many new business owners is realizing that taxes aren’t necessarily being withheld from their income the way they were from an employee paycheck.

Depending on your situation, you may need to make estimated tax payments during the year.

That’s why it’s important to know how much your business is earning and set aside money for taxes as you go. A separate business savings account designated for tax payments can make this much easier.

Waiting until tax season to discover that you owe a significant amount is not a bookkeeping strategy.

5. Don’t Treat Payroll Like a Regular Expense

Hiring your first employee is an exciting milestone—but payroll comes with additional responsibilities.

Businesses need systems for properly calculating wages, withholding applicable taxes, making required tax deposits, maintaining payroll records, and filing required reports.

Most importantly, payroll tax money isn’t extra operating cash. Money withheld from employees needs to be handled appropriately and remitted when required.

If you’re planning to hire, talk with us before that first paycheck rather than after.

6. Keep Up With Quarterly Reports

Starting a business introduces deadlines that you may never have encountered as an employee.

Depending on your business, you may have quarterly payroll filings, estimated tax payments, sales tax returns, New York State filings, or other reporting requirements.

Put these deadlines on your calendar and create a system for making sure the necessary information is ready well before the due date.

Missing a filing because you didn’t know it was due doesn’t necessarily eliminate penalties or interest.

Don’t Forget to Record Your Deposits Correctly

Tracking expenses is only half of good bookkeeping. You also need accurate records of the money coming into the business.

This becomes especially important when you’re moving money between accounts, contributing your own money to the business, receiving loan proceeds, or transferring funds.

Not every deposit is necessarily business income.

Keeping accurate records of what each deposit represents gives you a more realistic picture of your business and can save considerable time when your tax return is prepared.

Separate Business and Personal Finances

One of the simplest bookkeeping habits a new business owner can establish is keeping business and personal finances separate.

Open a dedicated business bank account and use it consistently for business income and expenses. Depending on your needs, you may also want a separate savings account where you regularly set aside money for taxes.

Mixing personal groceries, business supplies, vacation expenses, customer payments, and everything else in one account makes bookkeeping much more difficult than it needs to be.

Good Bookkeeping Is About More Than Tax Season

Good records aren’t just something your tax preparer needs once a year.

They help you answer some of the most important questions about your new business:

Am I actually making money?

Where is my money going?

Can I afford to hire someone?

Am I prepared for my next tax payment?

Which parts of my business are growing?

The earlier you establish good bookkeeping habits, the easier it becomes to make informed business decisions.

New Business Owner Bookkeeping Checklist

• Track business mileage
• Save and organize receipts
• Record business expenses regularly
• Record deposits accurately
• Keep business and personal accounts separate
• Document a qualifying home office
• Set money aside for estimated taxes
• Maintain accurate payroll records
• Set aside payroll and sales tax funds
• Track quarterly filing and payment deadlines
• Reconcile your records with your bank statements regularly

Start With Good Habits

You don’t need a complicated bookkeeping system on your first day in business. You do need a consistent one.

A little organization throughout the year is far easier than trying to recreate twelve months of business activity when tax season arrives.

If you’ve recently started a business—or you’re realizing your current bookkeeping system could use some help—Gleason Tax Advisory can help you establish better habits and stay on top of your tax and reporting responsibilities.

Happier, Healthier & Less Stressed.