When forming a Florida LLC or other business entity, bookkeeping is an essential component. Some companies make bookkeeping a lower priority, but you should never make that mistake. Failing to keep accurate books can lead to high costs in the future. You must have some sort of formal bookkeeping process, whether you do it yourself, use software, or hire a professional bookkeeping service.
Ensure Your Books Are Current
The most important part of bookkeeping is to ensure that your books remain current at all times. This should be done on a weekly basis at a minimum. You can designate a specific time to ensure all transactions are on the books or let a professional take care of it for you.
Always Open a Separate Account
The other aspect of Florida bookkeeping that cannot be overlooked is opening a unique bank account. You must keep your personal and business expenses and income separate. This will help you prevent errors on taxes, which could be a costly, as well as time-consuming, mistake.
Bookkeeping Prepares You for Taxes
Staying on top of your LLC's bookkeeping will make the process of completing your taxes go by much more smoothly. If your business structure is not an LLC, then you will likely need to pay a range of taxes, from federal income to unemployment to payroll taxes. There will also be local and state income taxes. LLCs have pass-through taxation but must still report the relevant information (without paying corporate taxes). Furthermore, owners of LLCs will need accurate bookkeeping to ensure they file their personal taxes correctly.
Even if you hire an accountant to take care of your taxes for you, which is a smart decision given the complexities of business taxes, they will need records to go off of. Your organized bookkeeping will be able to provide this. For the easiest tax-filing experience, ask your accountant from the start which information they need you to track.
Professionals Can Also Provide Guidance
In addition to taking care of the hassle associated with bookkeeping, a professional service for Florida LLCs can also help from the perspective of guidance. Professionals will be fully aware of which records you need to keep for things such as taxes, annual reports, and other compliance matters. They will also be aware of which expenses can be deducted from your taxes and be able to organize everything so that this information is nicely separated.
What You Should Record
Understanding the importance of bookkeeping for a Florida LLC is one thing, but knowing what to record is another. The most important element of the bookkeeping is the expense records. You can use a service, an accounting program, or a manual method. Whenever possible, pay with a card or check for business expenses as this generates a receipt with proof. It also gives you room for notes regarding the expense.
Just some of the expenses that you should record as part of your bookkeeping include mileage expenses related to business transportation, other expenses related to travel, and phone expenses. With all of these expenses, detail as much information as possible, such as the reason for the travel. You will also need to record miscellaneous expenses such as office supplies. Even entertainment expenses, such as business meals, play a role. Keep in mind that the IRS will very likely scrutinize your entertainment expenses, so ensure your records are strong.
The bottom line is that with proper Florida bookkeeping, your LLC or another type of business will be better able to track spending and income, assisting with taxes and other formalities.