Hey! I’m so glad you stopped by today for Brilliant Bookkeeping Tip #2! Today I’m going to give you a great tip on managing sales tax and payroll tax to avoid extra stress and cash flow issues every month.
Keep sales tax & payroll tax as separate items from revenue.
The taxes that you collect from sales is not income for your business. You are simply holding that money for your state until it’s time to pay. The same holds true for payroll taxes (state, and federal) that you withhold from paychecks. Make sure your bookkeeping is set up properly so that those taxes go to a separate liability account that you can keep track of. You can even set up a separate bank account to deposit those funds into so you don’t accidentally spend them and end up scrambling for money when it’s time to pay!
I have seen business owners really fumble through this, creating a ton of unnecessary cash flow issues and stress when it’s time to pay the taxes. It doesn’t have to be that way! Set yourself up for success ahead of time and proactively set the money aside each month.
Did you know? Even nonprofits have to pay payroll taxes! So if you’re a nonprofit be sure that you’re doing this correctly. Also, depending on your mission, or the revenue generated from product sales or a fundraiser, you may also be liable for paying sales tax. Find someone who can advise you on this.
I’ll be back tomorrow with Tip #3!
I love giving you tools to help you do great bookkeeping for your business. If you have a question you’d like to see addressed, be sure to connect through email or social media and let me know!
Want these tips delivered to your inbox? Sign up now…
Equip Bookkeeping is a cloud-based bookkeeping service empowering businesses and nonprofits around their finances. I can help you make smart, confident decisions about your business.
Let’s take a look at the current state of your business together. Is it healthy? What could be improved, or focussed on to create more profit? Or maybe you’re just sick of doing the books?
Set up a free consultation with me today. This will allow us to get to know each other: you can share more about your business, ask your bookkeeping questions, get some great information about how you can manage your books with more ease, and possibly become an Equip client with a personalized financial plan for your success.
Equip Bookkeeping Solutions
Owner & Pro-Bookkeeper