Recordkeeping to a business is like a person’s physical health. It is important to be in good health mentally, physically, and emotionally to keep a peace of mind, prevent life threatening health issues, and for some, avoid receiving a high hospital bill. Likewise, a business owner should prioritize keeping good records to have a peace of mind about the health of their business and be prepared to substantiate deductions listed on their tax returns when asked for proof by the Boss (referring to IRS).
What the point?
Recordkeeping is important for the following reason:
- It helps you monitor the progress of your business.
- It useful when it comes time for preparation of the businesses’s financial statements.
- It is essential when identifying the source of your accounts receivable and payable.
- It helps you keep track of the amount of your deductions.
- Ultimately Support items on your tax return.
Very often than not, people avoid going to the doctor because they assume they don’t have any health issues which is not a good idea. The worst mistake a business owner can decide to make is to estimate their deductions on their tax returns based on bogus assumptions. The Boss encourages business owners to keep good records, not just for tax season, but all year around so when notices for more information come around, you will not be frightened.
Just like annual physical ‘s are highly recommended, so is periodic review of a business’s records to ensure reliability and accuracy of the records kept. Using a bookkeeper and CPA will save you time and money in the long run. Have a seat and share some coffee with experience financial and tax professionals who will give advice on good recordkeeping tools.
Every business must keep records. Don’t let the Boss catch you by surprise and unprepared to respond. Good records will save you in times of need and out of season.
If you will like a couple of record keeping tools, please feel free to contact me at mvbalbuena@icloud.com.
Handbook for the Self- Employed and Small Businesses 