Anyone who has worked with a bookkeeper knows that each one has their own set of rules they want you to follow. Some are stricter than others, but each one is trying to keep your financial records in the best order possible. Keeping a paper trail is a simple way to ensure your records are accurate. Below are some simple steps to creating and maintaining a paper trail. (Comes in handy should you ever be audited.)
- Keep a mileage log for your car for any business trips you may take. This includes trips to meetings, interviews, purchasing office supplies…
- Keep a deposit ticket for every deposit you make. (A great addition to this is to copy all of the checks in a deposit and attach it to the deposit ticket so there is no question later on which payments make up which deposits…This can also be done by writing down the check number, payee name, and check/cash amount on a piece of paper and attaching that to the deposit ticket.)
- Keep all business receipts in one location. If possible, write the event or reason on the top of the receipt for quick reference. (Paco’s Taco’s – Mtg w/ Mr. Svence)
- If you have a home office, keep track of your rent payments, utility payments (gas, water, electric, phone, internet, etc.) as these are tax deductible for your business. (Your accountant/bookkeeper/tax preparer will be able to assist you with this as there will be some calculations and percentages required.)
- If you use your personal car for business purposes keep track of what you are spending for gas, maintenance, and insurance as a portion of those expenses may also be tax deductable for your business.
- If you take a draw of any nature (pay yourself) make sure to note that this is what you are doing by creating a receipt for yourself. (Take a sticky note and write your name, the reason (paycheck), the amount you are drawing, and the date. Place this in with your receipts for that time period.)
- Always keep your bank and credit card statements. These are used to reconcile your accounts each month and for quick reference later on.
- At the end of each year, once everything has been entered and verified print out the following statements and add them to your records for that year. The final statement will assist you in filling out and filing your income taxes for that year.
- Profit & Loss (detail)
- Balance Sheet (detail)
- Open Invoices Report (This will be filed with the next years records as a reference document)
- Income Tax Detail Report for tax line mapping
I hope these simple elements assist you in better record keeping. One last suggestion is to use some type of accounting software to keep track of everything from month to month. If your company is extremely small you can do this with a spreadsheet, but the best is to utilize a true accounting software program, like QuickBooks that will assist you in tracking what people owe you, account balances, and so much more.
