Record Keeping for Your Small Business
October 19, 2023
Navigating a small business can be exhausting. Throw in the bookkeeping and recordkeeping aspects, and a business-owner can be overwhelmed. Most owners are tasked with running their business while also working in their business. However, having an organized financial system is essential to the success and growth of your business. With so many important things owners need to keep track of, Warren Accounting Group is here to offer you some tips to assist you and your business with record keeping.
1. Create a System
You can create a pretty simple record keeping method for your small business by having two binders. One of the binders should include all the documents you are required to have in the state, such as permits and licenses. Items in this binder may include:
- Articles of Incorporation or Articles of Organization
- Company seal
- Meeting Minutes
The second binder should keep your daily records and needs housed in order. Items in this binder may include accounting records, insurance policies held by the company, the names and addresses of shareholders, shareholder interest, and state filings which include annual reports.
2. Know the Rules
No matter how you manage your business’s accounting, you need to know what records need to be kept and how long they need to be kept. You need to keep receipts that pertain to your business’s expenses, gross receipts, and purchases to track your business’s debits, credits, and income.
The documents that should be kept for gross receipts include sales receipts, deposit information, invoices, and all forms, such as 1099-MISC. Expense documents include bank account statements, canceled checks or documents proving payment, cash register receipts, credit card receipts and statements, and invoices. You will also need to keep financial statements which will include credit card receipts and statements, bank statements and canceled checks, sales journals, and all invoices.
You will need to keep business documents and receipts for at least three years. This time frame includes the possibility for IRS audits. This is why you should save all the documents and receipts that may be needed. If the IRS suspects that you are underreporting your income, that timeframe increases to six years.
3. Protect Your Bookkeeping Records
In the digital age we live in, having all your documents online is convenient and can save a ton of time. However, online, digital recording keeping comes with the threat of hackers and breaches that can affect your business. We suggest you keep paper copies of your records in files broken down by month and year, but if you choose to save them digitally, do the following:
- Protect your documents with a password and two-factor authentication.
- Have them in more than one location, so if a folder accidentally gets deleted, they are still accessible.
4. Best Practices
The rule of thumb for keeping up with bookkeeping and accounting is to routinely monitor your financials, keep track of all documents and records you will need, and double checking your data to guarantee everything is correct. The bottom line is to know what documents you need and where they are, keep them secure and organized, and stay up to date on government rules and regulations.
5. Hire an Accounting Group to Help with Bookkeeping and Payroll Services
The amount of time you are spending on your bookkeeping could be another reason you should consider outsourcing those needs. Tracking expenses and income, managing tax payments and returns, and staying in compliance while organizing all the paperwork can be very overwhelming. Working with a professional can save you time and give you peace of mind. Your friends at Warren Accounting are here to help!
Working with an accounting service to assist you in your bookkeeping is a great way to ensure your records and documents are kept safe and accurate. Visit https://www.warrenaccountinginc.com/ or give us a call to schedule a meeting today. We would love to help you and your business with your bookkeeping needs. Let us focus on your books, so you can focus on your business!