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Burn the Paper: Modern Day Recordkeeping for Small Businesses
Written by Marija Berney & Erin Vukelich - JCCS
So, you have finally mastered enough courage and savings to start that new business of your dreams. There are so many things to be excited about – the product, the marketing, the location, the bookkeeping‌.Wait, what? Yep, we know, that last one is not exactly the reason you are getting into a business for yourself. The task of recordkeeping can be daunting, and it may be tempting to put it off until there is time to deal with all those receipts and statements. The danger comes when it does not take long for the paperwork to pile up to the point where it simply gets overwhelming.
Why do it?
Maintaining a recordkeeping system is a requirement you must comply with for federal and state tax purposes. The IRS requires that all business records are available at all times for inspection. If any of your tax returns are under examination, you may be asked to explain the items reported. Supporting documents include sales slips, paid bills, invoices, receipts, deposit slips, and canceled checks, as well as bank, credit card, and vendor statements. It is important to note that the IRS will not accept proof of payment by itself as support for a deduction. That means the credit card statement alone is not enough. You must keep credit card sales slips and invoices to show that you also incurred the cost. For purposes of tax return examination, records should generally be kept for at least 3 years. It is advised that some items are kept permanently. Those include copies of contracts and leases, tax returns and financial statements, legal and insurance records, and real property records.
Where to start?
The records system can be as simple as an Excel spreadsheet or more sophisticated accounting software. The choice of complexity will depend on volume of transactions and business needs. Generally, a good recordkeeping system will be simple and easy to navigate and provide a summary of your business transactions. Most will include the following elements: business checkbook, daily and monthly summary of receipts, list of expenses, list of assets, payroll, and employee records.
something like this: she drives to a local supply store, while letting her cell phone track the miles. Walking out of the store, she scans her receipt with her smartphone, which recognizes the vendor and records it via a mobile app. When she receives an online order from a customer, she processes a credit card payment on her tablet device. By the time she gets home and opens her laptop, all those transactions are already synced into her online accounting system and all she has to do is open the internet browser to review the reports. Sounds too easy? With the tools below you too can go from buried in paperwork to bookkeeping in style.
Tools and tips
For recording business miles and purchases using smart phones, both iOS and Android have many applications that offer a wide variety of tools providing options for different budgets and levels of complexity. They range from simple apps that handle one function like MileIQ (Android/iOS) Don’t let the IRS to be the only one to benefit from In a day and age when small business can be run for tracking and creating a log for business miles your diligence! Thorough knowledge and un- from a smartphone, there are plenty of options driven to more complex apps like Expensify (Anderstanding of the books can be of tremendous that can take the bookkeeping task mobile. For a droid/iOS) that captures transactions, mileage, benefit to the business owner. In the day to day modern woman, keeping daily records would look time tracking and more.
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operations, the bookkeeping system can help keep track of bills due and monthly costs. Even more valuable, is the business analysis function and ability to identify products and services that bring the most profit. This will allow you to focus the efforts on things that make the biggest difference in the success of your business. Time and resources spent on the right product can make a difference between business dreams coming true or failure.
oman.com