Why do we need record keeping

A complete set of records will speed up the examination. More In File. Good records will help you do the following: Monitor the progress of your business Prepare your financial statements Identify sources of your income Keep track of your deductible expenses Keep track of your basis in property Prepare your tax returns Support items reported on your tax returns Monitor the progress of your business You need good records to monitor the progress of your business.

Prepare your financial statements You need good records to prepare accurate financial statements. An income statement shows the income and expenses of the business for a given period of time. A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Identify sources of your income You will receive money or property from many sources. Keep track of your deductible expenses Unless you record them when they occur, you may forget expenses when you prepare your tax return.

Keep track of your basis in property Your basis is the amount of your investment in property for tax purposes. Prepare your tax return You need good records to prepare your tax returns. Support items reported on your tax returns You must keep your business records available at all times for inspection by the IRS.

No wonder we hate keeping records. Well, guess what? I said it. Here are the top five reasons why I truly believe this statement. A smart businessperson keeps track of her income cash in and expenses cash out monthly, sometimes even weekly. You do not need a fancy accounting software package to do this. Simply keep a journal monthly and log in all of your receipts and invoices, and there you have it. Tax season is the busiest time of year for these professionals.

If you expect them to do your bookkeeping and recordkeeping as well, expect to pay for it. Record keeping is an important step in telling the story of your business. Unfortunately, many small businesses do not have the time or resources to keep accurate and consistent records. Outsourcing this area of your small business ensures that your records are accurate and complete at all times. This investment in your business could save you thousands of dollars in the long run!

We match up with ideal candidates for services by allowing small to midsize businesses to increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today! Record Keeping Reduces the Risk of Fraudulent Transactions A business must also record expense transactions in a timely manner to ensure that you only receive payment for an invoice one time. Record Keeping Helps Your Tax Situation You must keep track of your tax-deductible expenses when they occur to maximize your ability to take advantage of any available tax breaks.

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