Recordkeeping

Evidence can set businesses free from being seen as reasonably suspicious, or as accountants like to say, “Raising a red flag.” To avoid being audited and to keep in good business standing, please make sure to routinely maintain an accurate recordkeeping and bookkeeping system.

Simple Steps for Perfecting Recordkeeping and Bookkeeping:

• Open a separate bank account for the business.
  You can claim the running costs of your business bank account as a business expense. The same applies to a credit card, if you simply have another credit card in your personal name, keeping a separate credit card for the business makes the bookkeeping so much easier.
• Don’t mix your personal expenses with your business expenses.
  A simple example of this is when you buy fuel; if you happen to buy some soda or candy etc, pay for them in a separate transaction. You need to make sure that you have legitimate business expenses and keep those personal items separate from the business.
• Always ask for a receipt.
  When you do make a purchase for your business, make sure that you always ask for a receipt. By getting into the habit of always asking for a receipt, you don’t have to worry about whether or not you need one, because you’ll have them all anyway.
• Use a Vehicle-log book.
  Take a notebook and use it only to write down the mileage reading at the beginning of the financial year, and enter the distance travelled each day you use your vehicle for business travel. Use a separate logbook for each vehicle.
• Keep all your business records.
  Have a place to keep all your business records for each financial year. Don’t throw the receipts on the dashboard or glovebox of your vehicle. These days many receipts can fade, so get into the habit of putting your receipts into a monthly file or an envelope in your office. At the end of the month, you can attach them to your bank statement to maintain good recordkeeping organization.

Recordkeeping Categories

At The Tax Club, our clients often ask how they should divide their business records. The best thing to do is to divide your business documents into categories. Then, place all recorded information for that category in a clearly labeled folder. Here’s a list of categories you can use (if they apply to your business), feel free to add or subdivide these categories:

• Accounting and bookkeeping records
• Bank records
• Contracts
• Corporate records
• Correspondence
• Employee records
• Frequently used forms
• Marketing and advertising records
• Permits/licenses
• Stock records
• Tax records

The Tax Club understands how important proper recordkeeping is, and we can easily accommodate people with their recordkeeping and bookkeeping questions and needs. We encourage you to contact us if you'd like more information on how The Tax Club can help you with your business essentials.