Important information about record keeping for your business.

Why Maintain Accurate Records?

• With all the legal and tax obligations required of a small business it is crucial you keep careful records.
• Bookkeeping and Accounting are critical in helping Business Owners track their money so they know what they are earning and where they are spending their money.
• Even the smallest business needs to maintain records of their business transactions!

Quick Facts about Record-Keeping

• IRS studies show that poor record-keeping, not dishonesty, cause most small business people to lose at audits or fail to comply with their tax reporting obligations, with resulting fines and penalties.
• Small businesses have been an IRS target for years because they mix personal and business expenses.
• The IRS is not perfect; their mistake could cost you big bucks unless you have the records to prove your tax deductions.

Top Reasons to Maintain Accurate Records

• Provides the business owner with a clear financial picture that allows you to monitor the success or failure of your business.
• Becomes a vehicle to monitor performance in specific areas.
• Provides complete and accurate tax data.
• Becomes a basis for sound planning of your businesses future.

Requirements of a Good Financial Record-Keeping System

• Keep it as simple as possible:   You don’t want to spend more time keeping records than you do running your business.
• Keep it understandable:   Your record keeping system should be understandable by others – it isn’t enough that you understand what everything means.
• Keep it reliable and accurate:   Should give you essential information so you can create the reports you need.
• Keep it efficient:   Should be able find the information when you need it.

The “DO’S” of Financial Records

• Pay all your bills by check or with a debit/credit card – cash does not create an audit trail for your accountant or the IRS.
• Deposit your receipts often – develop a schedule and stick to it.
• Support all transactions with documentation – KEEP RECEIPTS!
• Keep your records as long as they are needed for the administration of any provision of the IRS tax code.

The “DO NOTS” of Financial Records

• Don’t mix personal with business:   keep separate checking accounts for both.
• Don’t think you are the exception:   the IRS targets small businesses for audits!
• Don’t let your financial records wait:  a lapse in time can lead to mistakes and inaccurate information.

Final Tips on Record-Keeping

• Post transactions daily (ideal) but a LEAST once a week.
• Use a financial or accounting software program.
• Hire an Accountant to prepare tax returns and audit your books to make sure you stay on track.
• For additional information regarding record-keeping compliance check out IRS Publication 583 ‘Starting a Business and Keeping Records’ at http://www.irs.gov/pub/irs-pdf/p583.pdf

Accounting Software:   Which is right for you?

• Keep it as simple as possible:   If you don’t have employees and operate your business as a ‘Sole-Proprietor’ then Quicken Home/Office may work for you.   Check out this link to learn more http://quicken.intuit.com/small-business-finance/.   
• If you have (or will have) a maximum of 20 customers and 20 vendors then QuickBooks Simple Start could be what you need.   For a free download of the complete software program go to http://quickbooks.intuit.com/qb/products/ss_free_starter/direct_download_email.jhtml?priorityCode=3951200000
• If you have employees, want to track inventory and need all the bells and whistles then one of the full versions of QuickBooks may be the software for you.   Talk with your accountant to determine your needs and let him/her ‘set it up’.  QuickBooks is very user friendly when doing your day to day transactions and pulling up the reports you want but you have to know what you’re doing to set it up correctly.