From keeping tabs on your cash flow and expenses to legal and audit purposes, one of the most important things to do while managing your business is to keep good records. Here are three questions to ask yourself to help you keep good records for your small business:
- Which records do you need to keep?—You will need to keep any document that can support purchases, sales, payroll and other miscellaneous transactions. These documents can be paid bills, invoices, receipts, etc.
- How long do you need to keep your records?—The Internal Revenue Service’s website recommends that you keep business receipts and records for three years. It is always a good idea to consult with your accountant before discarding receipts just in case.
- Is all of your information accurate?—Try to set aside time every few weeks to review your records. Make sure that you have included enough information that you will be able to record all expenditures correctly.