If you’re a business starting out, the first order of business when it comes to record keeping is finding a system that works for you, and understanding the types of records you need to keep. It doesn’t have to work for your cousin Bob, or your neighbor’s friend, it has to work for you.
Everybody has different ways to organize themselves, and when it comes to money, this is one area you can’t slack on. If you feel you’ll be more comfortable with a paper and pen type of system, that’s fine. If you think you can be comfortable with book keeping software, this is something you really want to consider! It will take much of the work out of the process for you.
Now that you’ve decided how you’ll keep track of your records, let’s talk about the types of records you need to keep! You need a system that will CLEARLY show both your expenses and your income.
You’ll want to show a clear path all business transactions.
When you’re keeping track of your expenses, income and credits, you’ll also need to show the supporting documents. What are considered supporting documents? These are things like receipts, invoices, bills that have been paid, as well as things like canceled checks.
Quite simply, you’re tracking the incoming money, and the money going out.
This IRS offers this information on record keeping for small businesses.
The Small Business Administration has this document about record keeping to help you get started.
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