Many people use their Point of Sale (POS) System to report their income. Your POS is apart of your financial system. It is only there to collect the money. It is not a reporting system or software you use for bookkeeping. That is not proper bookkeeping. Your POS system do allow you to run reports and do income analysis based on days, weeks or months you run the reports for. However, that is not your bookkeeping process. Bookkeeping require data entry for income, expenses, assets and liabilities.
You need bookkeeping to get your Net profit.
Your net profit is what you pay taxes on. The income your POS report is your Gross Profit. If you pay federal taxes on your Gross Profit you have already over paid in taxes. Now, in Washington state, we have state taxes. Our state taxes, which are called Business & Occupation Tax, is based on your gross profit only. So, if you live in Washington, you will pay state business taxes on the gross profit. Now, this is true here in Washington because we do not have a state tax. Check with your specific state to see what business taxes and fees are due for your business. Many times as business owners, we are most worried about Federal Taxes. This is a big mistake because you can also get charged penalties when paying your state taxes late.
So understand, you will need to get to the place where you:
!.) Have a bookkeeping software
2.) Have a separate bank account for all business transactions
3.) Reconcile your bank statements to your bookkeeping
4.) Do monthly financial analysis
and much more.
These things will ensure you are capturing all your income and expenses and capturing the correct data you need to run analysis for business growth as well as running reports to pay proper taxes.
If you are ready to get your business back office set up professionally schedule a time for us to speak for a consult to determine your business needs. If you are looking for a quick books tutorial to get you started for now click here. Many business owners take care of the basics of bookkeeping themselves until they can afford someone to do it for them.