Did you start a new business this year? By Daniel Stoica Accounting Professional
Congratulations! Welcome to Startup Entrepreneurship! Celebrate and enjoy your success!
Do you have an accurate record of your business transactions?
Why should you keep records?
Good records will help you:
- Monitor the progress of your business
Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records increase the likelihood of your business success.
- Prepare your financial statements
These include income (profit and loss) statements and balance sheets. These statements can help you in dealing with your bank or creditors and help you manage your business.
- Identify source of revenues
You receive money from many sources. Your records can identify the source of your revenues. You need this information to separate business from non-business receipts and taxable from nontaxable income.
- Keep track of deductible expenses
You may forget expenses when you prepare your tax return, unless you record them when they occur or at least before you prepare your tax return
- Prepare your tax returns
Your records must support the income, expenses, and credits you report.
- Support items reported on tax returns
You must keep your business records available at all times for inspection by the Taxing Authorities. If a Taxing Authority examines any of your tax returns, you may be asked to explain the items reported. A complete and accurate set of records will speed up the examination, minimizing your cost in time and hassle.
What kind of records should you keep?
You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for tax purposes.
How should you record your new business transactions?
Purchases, sales, payroll, and other transactions you have in your new business generate supporting documents. These documents contain information you need to record in your financial books.
What is the burden of proof?
The responsibility to prove entries, deductions, and statements made on your tax returns is known as the burden of proof. You must be able to prove certain elements of expenses to deduct them.
Do you have an accurate record of your business transactions?
I look forward to your comments and interaction.
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