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Recordkeeping Basics
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RECORDKEEPING TIPS
Brigitte A. Thompson
As a business owner, you need to keep complete and accurate records,
not only because the IRS requires it, but because it can help
you save money by reducing your taxes.
Try to make it a habit to request receipts for everything you
purchase and keep them all in one envelope. Once a week, sit down
with your receipts and your checkbook.
Some people find it helpful to create a simple filing system using
manilla folders and loose-leaf paper. Under this system, folders
would be labeled by month. Transactions are recorded on 8 1/2"
by 11" sheets of paper placed in the front of each folder
and all supporting documentation gets filed inside of it. You
should include one sheet of paper for income and one for expenses.
Be sure to staple them all together and prepare this package for
the front of every folder.
For every expense, list the date, who was paid, the item purchased,
the amount and the method of payment. Separate your receipts into
each category, record them, and file in the appropriate folder.
For income, list the date it was received, the source, the amount
received, the method of payment, reason for payment, and reference
number.
At the end of the month, add up the amounts listed on your sheets
of paper. At the end of the year, simply compile the totals from
each month to arrive at your final numbers.
Once you have completed
the year, file everything away in large 10" by 13" clasp
envelopes marked with the tax year and keep in a safe place. You
may reuse your emptied folders or start over again with new ones.
Recording everything on a weekly basis will allow you to create
an organized recordkeeping system for your business and will support
your claims in the event of an audit.
All information is based
on the current federal tax laws of the United States. Since these
laws are subject to change, neither the author nor BusyParentsOnline.com
assume liability for modifications that occur after the creation
of this work. Every effort has been made to ensure this information
is as accurate and complete as possible. These articles contain
general information for businesses and are offered as an overview
of the law.
© 2003 Brigitte A.
Thompson
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