The year was 1998 and I was only caring for one child. In fact, having one child enrolled, only brought in over $300 a month in income for my childcare business. That was not very much money to manage, however, it was a humble beginning and a start to managing income and expenses in my business. Moreover, as the business grew, I realized the importance of managing my income and expenses.
In the start-up days of my childcare business, I maintained my business expenses on a hand written ledger and I must say that I am so grateful for financial software today!
Over the years, I realized that if you did not keep a close eye on the financial status of your business and maintain your records, that you will not be prepared at tax time.
I am going to share with you six practical ways to maintain your receipts and financial records:
- Create folders for Business Income, Car expenses, food expenses, payroll taxes, credit card payments, utilities, classroom expenses, maintenance,etc. I think you get the picture. This system is great, in the event you need to review your expenses.
- Schedule a time once a week to enter your income and expenses into a computerized financial software program. When you enter receipts into the computer, the computer does the calculating and generates financial reports for you.
- Back-up financial records to a back-up hard drive. In the event of a computer, you will not be at risk of losing your financial records.
- Keep Financial Records for at least 10 years in the event of an Audit.
- Review your bank statements at least once a month, to assure that you have deducted every possible business expense. This is a great way to find more expenses.
- Keep Your Payroll and Tax Return Records in a Locked file cabinet. This protects your employees identity and assures that no one has access to your tax information.
I look forward to your feedback on the record keeping strategies in this post. Be sure to leave your comment below.
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Accounting is not just a once per year task. It should be scheduled as a regular part of your routine. You may be like many other business owners who hold off until they need financials prepared for tax time. If you are not having your books updated regularly you may become frustrated because you want to go directly to the top of the game but cannot figure out what is missing and why. A lack of financial information can keep you from advancing from one phase of business to the next.
- Accounting helps you make sound business decisions. Faced with several alternatives, the best choice is the one that you can assess qualitatively and backup with verifiable numbers. The financial results that you want your company to achieve can be quantified by information in your accounting system. It doesn’t matter if you are using a manual method of accounting or a sophisticated software program. As long as the method you choose gives the information you need when you need it then the choice of systems is entirely up to you.
- Success is where preparation meets opportunity. Always prepare financial reports to be ready to move on growth opportunities. With accounting reports you can make conclusions about ways to grow your business. Some examples where accounting information comes in handy other than at tax time include sales analysis and projects, weighing investment options, and deciding whether to include financing in your capital structure. All of the choices require forethought and accounting data helps reduce your financial risk.
- Avoid impulsive decisions. Successful companies are built by managers who use qualitative and quantitative data in investment decisions. Before tackling any new project, whether it is starting something new or expanding an existing company, you should always count the cost of the project. Use up-to-date information from your accounting reports to get a good idea of where the company stands now and how it should proceed in the future.
For more practical tips and advice, visit the financial center for business owners at http://www.tbsusa.com
About the Guest Writer: This blog post has been provided by Benita Tyler, The President of TBS USA Accounting and Tax Advisors and Creator of the Position to Prosper System™. Contact Benita at firstname.lastname@example.org: Connect with Benita on Facebook and Twitter!