To all our small business owners, let’s have a heart-to-heart chat. And by small business owners, we mean those one-person startups, or companies with less than 10 employees. While providing awesome items or services through your amazing company, you realize that a substantial deal of effort has to go into your business administrative work. All you want to do is continue doing what you’re good at, whether it’s lawn care, baby-sitting, designing, writing, building, or whatever.
Nevertheless, paperwork is just as essential to the success of your business as doing the actual job. And with decent recordkeeping, you can assure that nothing important goes unnoticed. Here are some helpful tips for keeping business records featured in the IRS Publication 583
Method of Recording
It’s your business so you should choose a recording method that works best for you. The ultimate goal is that your method clearly displays your company’s income and expenses. To do so, it’s best that your record system contains a business transaction summary. Typically, the summary should include your accounting book, or business checkbook, with records of your gross income, credits, deductions, or other business entries.
For the tech-savvy business owner, you can digitally store your business records. All requirements for physical paper records will also be for electronic records. Your digital record system must be able to collect, arrange, save, recover, and duplicate all electronic books and records in an easily read format. Each record of data must be complete, accurate, and accessible to the IRS.
If you happen to be in charge of more than one small business, make sure you maintain separate sets of records for each business.
Track with Supporting Documents
“The proof is in the pudding,” and who wouldn’t like having proof to back them up? Along with your accounting books, you need to keep supporting documents that can justify what’s within your records. For transactions, these can include paid bills, receipts, monetary slips, invoices, and checks. You’ll also want supporting documents for business income, purchases, and other business expenses.
Separation is Key
The most important thing to remember, especially for businesses with only a sole proprietor, is to keep business and personal spending completely separate. One of the most common mistakes made is making business purchases through personal accounts.
A business must look and operate as a business in order to be seen as a business.
It would be more beneficial to have separate credit cards and bank accounts specifically for business use only. By doing so, you can easily differentiate professional records from your personal ones.
Whether you keep your records on paper, or digitally, make sure they’re stored neatly in a safe place. If you find yourself still getting together your records during tax season, you don’t have to stress. Get extra filing time with a tax extension from ExpressExtension. Within minutes, you can receive an automatic 5 or 6-month tax extension depending on the type of business you operate.
Like any good business team, ExpressExtension has you covered with our live support team in Rock Hill, South Carolina. If you have any questions, or need assistance e-filing an extension, we’re available Monday through Friday from 9 a.m. to 6 p.m. EST. Call us at (803) 514-5155, or you can contact us 24/7 at firstname.lastname@example.org.