Record keeping is extremely important to the success of every business. Small businesses that keep good records are more successful in the long run.
Micro business owners should focus on simple record keeping.
Here are some great tips to help:
1. Use duplicate checks.
2. Separate your personal and business checking accounts.
3. Do not mix personal and businesses expenses.
4. File your receipts by category, not date.
5. Use the memo line of a check to explain the expense.
6. Keep a mileage log, even if it is just a calendar with the destination noted. Look up mileage using Google Maps or Mapquest.
7. Keep a calendar of appointments.
8. When buying equipment that you will use for longer than a year, make note of the date and total price including sales tax and shipping. Your accountant will need this information to calculate a depreciation deduction.
9. Estimate the business-use-percentage on items that are both personal and business such as Internet usage, or cell phone usage.
10. Count your inventory at the end of the year.
11. Keep records of income such as sales slips, deposit slips, and invoices for services.
12. Use a petty cash account and balance it frequently.
13. Get a W-4 form from every independent contractor you hire before paying them. A W-4 form records their legal name, address, EIN or SSN, and is needed at tax time.Record who paid you on your bank deposit slips. Use carbon-less copy deposit slips.
Carol Topp, CPA is the author of the Micro Business for Teens books.