Keeping proper records will help you cut back on taxes, as well as cut back on headaches when it comes to tax return filing time. Here is how you can make your recordkeeping as streamlined as possible so you have accurate records without it having to take up time and attention:
Have a System for Storing Papers
The system could be by date, by type of expense or whatever other system you want. The most important thing is that you have a system. A filing cabinet can help avoid clutter. Again, order your filing cabinet by date, or by type of expense for tax purposes (e.g. meals, equipment, etc.)
Print All Digital Receipts
Whenever you book a flight, print your flight receipt. Anytime you make a business-related purchase online, print out the receipt immediately. When a purchase is completed online, it can be easy to forget to collect the receipt. Get in the habit of doing it so you don’t have to go receipt-hunting later.
Set a Time to Organize Your Records
Even the most organized business person can’t wait until the end of the year to organize their records. Once or twice a month, you will need to go through all your receipts and other records and ensure everything is properly filed, and you will need to enter expenses into your bookkeeping program. Little tasks can pile up quickly if you don’t have a set time to deal with them. Pick a time to organize once or twice a month and schedule it on your calendar.
Have Essential Papers in One Place
Papers such as W-2s, DBAs, FIDs, NDAs, assignment of IPs, accounts payables and sales records should all be kept in one place, ideally with an offsite back-up as well. Small businesses that get their employees information when they first sign on and then have to ask for it again later on because they lost it often end up looking unprofessional to their staff. Even worse, if the papers for a staff member who has left can’t be found, you run the risk of not being able to write off their expenses.
Outsource Your Recordkeeping
If your business is earning you personally more than $20 or $30 an hour, it’s probably time to outsource your recordkeeping. Bookkeeping is an important task that needs to be done, but it is not a rare skill. You should easily be able to hire someone for $20 an hour to take over the task for you, so you can put your attention on performing tasks that earn revenue.
These are a few commonsense tips for recordkeeping that will help make your life easier and your business more profitable.
