A proper system of maintaining records is necessary for your small business to ensure that the day-to-day running goes smoothly – and that during the end of your financial year, you do not waste time scavenging around for lost receipts and invoices.
Here are some helpful tips for making filing your taxes a snap!
- Organize a proper system. Keep different files where you can file invoices, receipts, payment vouchers, etc. If you are running different businesses, ensure that their accounts are maintained separately. Mark all the files in bold and clear letters.
Be perfect in maintaining cash transactions. Any bank transaction can be easily cross-checked and verified, but cash transactions without a proper receipt or accompanying voucher can look suspicious in the eyes of the IRS.
Keep your cash transactions clear by maintaining a detailed record for each of them.
- Maintain your personal records. You should also maintain your personal records regarding the details of any stocks, mutual funds or property that you might own alone or jointly with your spouse.
- Records that should be maintained. Some records that should be maintained are credit card slips, cancelled checks, bank statements and invoices. Specifically for tax records, you should also keep all 1099 and W-2 forms.
- Make your system universal. Keep your filing system easy to understand so that your employees or other family members can find and file the records easily if need be.
Proper accounting procedures for any small business is a necessity, and you should adhere to them even if you feel that it is a waste of time.
Not following a proper filing system might prove to be costly in terms of time and money, if you are unable to find the right supporting documents when the IRS beckons you.