Record Management Made Easy
Establish good habits and be persistent
?I know it?s here somewhere.? ?I?ll have to get back to you about that.? ?Where?s that…………?? Sound familiar? If so, chaos has crept into your small business and if not kept in check will spread like a virus.
Disorganization and confusion are irri- tating, but they?re also just plain bad for business. Think of it as a formula: in- creasing chaos equals decreasing profits.
For purposes of income tax, many books of accounts, records, and source documents have to be retained for a mini- mum of six years after the end of the last tax year to which they relate.
In the case of records regarding capital purchases, they should normally be kept until six years after the end of the tax year in which the capital property was sold.
Here?s what you can do to make record management easy:
1. Establish office management routines and stick to them.
2. Keep your business and personal expenses separate.
3. Get sufficient documentation for all business expenses.
a) Always get a receipt b) Label your receipts c) File your receipts
4. Get a separate bank account for your business ? and use it.
5. Keep a mileage log of your business travel.
6. Keep all your business records for a particular tax year together and in one place.
7. Schedule the scut work.
8. Make business planning a priority.
These eight things you can do to make your record management easy aren?t difficult. Like a lot of the administrative business related to running a business, they just require establishing good habits and persistence. But if you apply these rules of good record management now and follow through, you?ll see a huge difference next tax time and your accounting will be easier all year long.
Page 14, Spring 2010