S P O N S O R E D
When it comes to tax filing, there are a large number of forms that need to be filled out and deadlines that have to be met. The path to successfully filing tax returns requires hours of reconciliation, collecting payment and expense data, and filling in multiple forms. Often, tax seasons are also accompanied by nervous tension and physical fatigue. Serious problems can also arise if SMBs underpay income taxes due to tax filing errors, which can result in a tax audit and governmental penalties. Accounting software, such as Synder, can help you overcome these difficulties and assist with gathering information for easy tax report filing. Below, you will find 8 challenges small businesses may face when filing income tax returns and how Synder can help you make the tax season smooth sailing.
Book a demo with Synder and use the promo code “InsightfulAccountant” to get 50 free syncs!
Challenge 1 - Taking all fees and taxes into account
Before filing any tax, you have to collect all the payment data you have for a certain period of time. It often turns out that if a payment processor is connected to the accounting software directly, it is impossible to record certain details of a transaction (for example, a fee from the e-commerce platform) and these details need to be added manually. It means that you will have to look through each transaction and check if the important information is recorded or not. Perhaps this can be dealt with if you only have a couple of dozen transactions per day, but what if a business has thousands of transactions per day?
Today there is a wide range of accounting and bookkeeping software that is responsible for collecting data and can help you record all the necessary information whenever you receive payments from customers or pay business bills. One example of such software is Synder.
Synder connects to a payment processor and accounting software like QuickBooks or Xero and synchronizes all transactions automatically. When the transaction is synced you can check all the details, such as:
- a fee from a payment processor (e.g. Shopify Payments),
- a sales receipt for the total amount of the sale,
- a customer.
All this information will be reflected in your QuickBooks too. In the expense, there will be the customer’s name, email, billing address, sales receipt date, shipping information, reference, etc.
Such detailed information will help you to go through any tax season or audit smoothly and prepare financial reports in two clicks. Also, considering that this is an automatic process, you will have more time to devote to other important business tasks.
Challenge 2 - Keep track of every dollar during reconciliation
Reconciliation is a process that confirms that the general ledger accounts are balanced and accurate. At the end of every fiscal period, it is recommended to reconcile your accounts to verify that your transactions are balanced. This process may seem to be redundant or complicated, and it may not be clear why you should do it regularly at all.
Reconciliation with Synder can be done in just a few clicks. By connecting your bank accounts and payment platforms to your accounting software, you take care of the process of bringing accurate data in. The app will record all the transactions for a fiscal period so you can reconcile them easily whenever you need them. What remains, is for you to review the existing matches, staying in full control over your finances.
When you regularly reconcile your accounts you can keep good track of your business expenses and see how much and what you are paying for. You may notice that you have subscriptions to some services or apps that you no longer need or find too expensive and may want to cut those costs.
Challenge 3 - Pull data from all payment platforms
It is hard to manage multiple accounts when you work with several payment platforms. You constantly have to switch between them and focus on little things, at some point, you lose focus and make mistakes which can lead to the inability to reconcile due to the wrong information in your books.
With Synder, you can connect up to 15 payment processors and accounting platforms such as Stripe, Square, PayPal, Shopify, Amazon, eBay, Authorize.Net, LawPay, Ecwid, PinPayments, IntegraPay, Etsy, etc. You take control over all your e-commerce platforms and the bookkeeping process in one place. Moreover, the information about all your transactions will be automatically extracted from the payment processors and recorded in accounting software where they’re supposed to be. All you need to do is make sure all the transactions have the green “synced” status.
Challenge 4 - Track historic transactions
As soon as you connect your accounting platform and payment processors to Synder, you’ll be able to synchronize your future transactions with no effort, but what if you want to bring your previous transactions to the accounting platform as well? Or maybe you noticed there were a few transactions lost for some reason. There is no need to process historic data manually. Synder allows the uploading of historic transactions from your payment platforms. Plus, in comparison with other accounting software, you’re not limited from the Synder side in the time or number of transactions you want to upload.
Challenge 5 - Record multi-currency transactions
When selling goods on the internet, you may find it challenging to record multi-currency transactions. It is hard work to track changes in the exchange rates and record multi-currency transactions manually. Synder can easily handle transactions in foreign currencies. The settings for synchronizing multi-currency transactions are ready by default so you only need to enable it in your Synder account and make sure that you have enabled multi-currency in your accounting platform as well. Synder will apply exchange rates and make all necessary adjustments.
Challenge 6 - Prepare full and detailed reports
Businesses categorize their payment data when preparing different types of reports like Gross Receipts, Cost of Goods Sold, Gross Income, and more. Companies use categorization to classify transactions according to any characteristics.
With Synder, you can have transactions categorized into different income accounts based on the product names and prepare Profit and Loss reports in two clicks. To see how easy it is to prepare a P&L report, you can watch this 3-minute video here.
When all the information about your transactions is stored in one place you can get any report in a matter of seconds and you won't be afraid of tax seasons, audits, reconciliations, or deadlines. Also, the more detailed and clear your report is, the easier it is for your tax agent to check everything, and the sooner you will receive your tax refunds.
Challenge 7 - Spot the errors quickly
Misprints or lack of necessary information are the most common accounting mistakes, but they are easy to fix when they’re spotted in time during regular reconciliations. Mistakes that exist for months can grow bigger with time and eventually lead to troubles, fines, and a lot of stress. In some cases, businesses may face cash shortages or overdrafts. One of the reasons why your bank balance might not correspond with accounting records is that refunds may not be properly accounted for. Unfortunately, refunds are frequent in e-commerce, and it’s clearly important to record them accurately. If some payments don’t match, Synder allows you to undo any transaction synchronization in one click with its rollback feature. In any case, Synder ensures that every fee and refund is accurately recorded, guaranteeing that your tax records will be correct.
Challenge 8 - Keep your accounting completely secure
You don’t need to worry about the safety of your data with Synder. It is a 100% secure app. A business owner can have full access and control over the account and give Member roles to accountants and bookkeepers. Colleagues with Member roles (for example, your bookkeeper, accountant, or business consultant) will have limited access to business finances and won’t be able to see what they’re not supposed to.
Synder
Conclusion
In order to easily file tax returns, you need to thoroughly record your transactions. It is so much easier to get any report you need when all your payment data is structured, complete, and balanced. Synder helped over 20k businesses and processed a stunning $1 Billion worth amount of transactions for -Commerce in 2020. Book a demo, as it is well worth giving it a try. Use the promo code “InsightfulAccountant” to get 50 free syncs!
Author Bio: Victoria Daneeva is a qualified finance writer and marketing specialist. She considers the insights from the world of finances, eCommerce, modern accounting solutions as well as accounting automation as being the most fascinating ones to write about.