Records are important to the successful management of any business.
The type and format of records change but they must be maintained to make informed decisions and report your tax situation each year. Organized records make business easier.
Getting organized does not need to be difficult. Ever wonder how others stay organized? I believe it comes down to a system and a process. Different systems work for different people. Whether you prefer paper, paperless, accounting software or a spreadsheet, you need a system to keep track of your business records and finances. You also need a process to keep your system up to date. Regardless of your system and process, stick to it – catching up is harder than staying current.
As an example, have a process, i.e. rule, to write the business purpose on your receipts at the time of the transaction. Have a regular, frequent time to summarize records, file documents, update your accounting system and reconcile your accounts.
You may find the cost of accounting software a good investment as it will keep track of your business finances in one central place. You can find various options available with an internet search or ask your local CPA what he or she recommends. Local CPA firms or community education programs may offer inexpensive training to help get you started or answer questions.
Once you find what works for you make it a priority and stick to it. You may find that you not only have less stress come tax time but better information to manage your business.
Article written by Richard R. Dahl, a CPA and Senior Tax Manager with Security National Life Insurance. The content of this article is not intended as tax advice and cannot be used for avoiding tax penalties or promoting or recommending any transaction. Individual circumstances should be discussed with a qualified tax professional.