For some of you, record-keeping will consist of throwing receipts in a shoebox. Some additional, perhaps more organized options, include:
- Multiple file folders
- Expanding file box
- Ring binder
- Software program
- Physical ledger
All of these methods are fine; at least everything will be in one place. Here are some other tips to help keep your business more organized and cut down on bookkeeping and accounting costs.
- Keep your business and personal expenses separate
- Keep a separate bank account for your business and if using a credit card, get a separate one for your business expenses
- Get receipts or invoices for all business expenses and keep them in a monthly file. At the end of the month, attached these to your bank statement and make sure none are missing.
- Keep a log of your business travel in your vehicle. Note the kilometer reading on the odometer at the beginning of the financial year and then enter the kilometers by date each time you use the vehicle for a business purpose. Keeping your log in the glove box or on the dash of your vehicle will make this easy. If you have more than one vehicle for business purposes, keep a log in each.
- Keep all your business records for a particular tax year together and in one place.
- Keep your business records for at least six years after they are prepared, obtained, or the transactions completed (whichever occurs later) If you get audited or need to prove anything to the tax office, you are require to have kept your records. It is also useful if you choose to sell your business.
- Maintain an Asset Purchase Listing (equipments, vehicles, real estate used in business)
Consider whether your current method of record-keeping is a good fit. Are you always losing papers, or behind on entering data, or finding that you have no place to put some category of receipt? These problems can be solved by choosing or creating a record-keeping method. Just make sure you get a large enough shoebox.