Basic Record Keeping No matter what kind of business you are operating, in any country throughout the world, you must maintain good financial records! Why Keep Good Financial Records? Good records keep you informed about the past, present and future financial position of your business. With good records you can determine where your company is heading. You need to know whether your company revenues are going up or down. A new business' chance of survival is greatly increased with good record keeping. This will also make tax time so much less painful. You will be able to print 1099's easily, you will have the information you need for the accountant and best of all you will be able to take all the expenses you are entitled to and lower the amount of tax you pay! Setting Up A System There are no steadfast rules regarding the method that must be used to record your figures - those kept on paper are just as valid as those stored on the computer. What is important is that your financial records are accurate and updated regularly. What to Include in Basic Financial Records 1. Record Sales - This would include a listing of your clients, what items were purchases, any sales tax charged, etc. 2. Record Payments received for Sales - This would include keeping a record of credit card sales, checks or cash and any refunds issued. 3. Record Purchases- This is especially important in the areas of auto expense, meals and entertainment, and any large purchases. 4. Record Payments for Purchases - This is especially important in handling fixed assets. You will need to have a record of the date and amount. Tip One of the biggest mistakes business owners make is to mix their personal and professional finances. One way to avoid this is to open a business bank account and obtain a business credit card! Track all business expenses by backing them up with receipts and Keep Good Financial Records! |
