Accounting is a significant part of running a business, and sadly, it’s the part that most entrepreneurs are not prepared for in the slightest. If your window cleaning company is the first experience you’ve had with managing a business and the money coming into it, you might make some common errors that will cost you in the long run. Check out these top nine accounting tips for independent window cleaning companies so you don’t make a financial blunder early on.
Don’t wait until the end of the day to get all of your receipts and invoices together. Finish each transaction before moving on to another. You can still add up your earnings for the day at the end of your work, but you at least need to have a receipt or some sort of record for each transaction. This will ensure that you don’t accidentally forget to invoice a client, or that you add in more money than you actually made. Once you get into a rhythm with your paperwork, it won’t seem like such a daunting task.
When you work for a normal job, the employer pays a portion of your taxes, and the remaining money is taken out of your check. That’s not how it works when you’re self-employed. You have to pay all of your taxes at the end of the year, which is usually about 13% to 17% of your annual earnings. SE tax rates vary by year, so it would be best to save more than what you actually need. Put away 20% of your earning every month, and you should have enough to cover your taxes.
Rather than saving your money all year and paying your taxes all at once, you can pay estimated taxes to the IRS every quarter. This will only leave a little bit of money to pay at the end of the year, rather than several thousand dollars you might not want to see leave your bank account. If you happen to pay too much in your estimated taxes, you’ll either receive a refund at the end of the year or just have less to pay for the last quarter.
For more accounting tips for window cleaning companies, be sure to check out Part 2 of our financial management series.