Your business plan is impeccable. Your inventory is neatly organized. And your new business’ social media pages look fantastic.
So why are you shoving all of your business-related receipts and paperwork into an old shoe box?
When you run your own small business, good record keeping is essential. As the IRS notes, the costs of running a business are typically deductible. This can include things such as using your car for business and taking prospects out to lunch. The U.S. Small Business Administration also notes some business-related expenses may be deducted even before you even officially open. Startup costs include things such as employee training, advertising, product analysis and the costs associated with checking out potential locations for your company.
To keep this important information organized and business owners ready for tax time, it’s imperative they keep their financial data well-organized. The following four tips can help make this happen.
Invest In a Good Filing System
Rather than tossing your business travel receipts, bank statements and business credit card offers into a drawer or box, go out and purchase a small filing cabinet or a plastic tub and some file folders. Fox Business suggests making separate files for receipts, bank and credit card statements, vendor information, employee data and business-related expenses.
In case you ever get audited, it’s vital to have paperwork to back up business-related expenses, so be sure to have a file to store any home office, meal or travel receipts. Keep a copy of your calendar in the file, as well. This can help document any business-related travel or appointments. Also, create a separate file for insurance policy information, customer contracts and the like.
Consider Electronic Record Keeping
After you get your hard copies of paperwork and receipts into a workable filing system, Fox Business advises storing as much business-related information and data on the computer as you can. This includes expenses related to the company, transactions, a general ledger and any profit or income-related information. This method tends to be very workable and helps keep everything easy to access while reducing clutter.
Keep Business and Personal Expenses Separate
To keep financial record keeping as organized as possible, Forbes stresses the importance of making sure business expenses are kept separate from personal ones. For example, if you are shopping at a major warehouse store and are buying school supplies for your kids and printer ink and copy paper for your small business, do not be tempted to charge it all on one card and figure it out later. Although it’s technically possible to pay your company back for a personal expense, it can make for some messy paperwork. To keep your record keeping as neat — and headache free — as possible, keep your personal and business accounts, expenditures and receipts separate.
Schedule Financial Organization Time
Allocate 15 minutes or so a week to organize your business-related financial information. This way, you will stay on top of things. In addition to keeping your paperwork and financial information neatly filed away, it will also keep you aware of the finances of your business and exactly how things are going. When tax time rolls around, you will be extremely glad you took this regular time throughout the year to keep everything in order.
Join thousands of subscribers
And get updates as and when we publish new, informative and research based posts!