When operating a business, it is easy to feel bombarded with the daily tasks of ensuring that your business stays afloat to meet its mountain of monetary demands. As such, every so often, small business operators become trapped or side tracked from ensuring that the recording of these daily transactions are done. Hence, we have always pounce upon small businesses with little or no data to get their taxes done, financial statements or even to do their payroll. This has therefore raised a matter of or major concern as our experience has shown us how detrimental this can be in the event that a particular business may become prompted by the Tax Administration to receive an audit. Thus, here are some key pointers to note on how and why maintaining proper records is so important. We will explain some scenarios of how it can be done as well. So, let’s go:
1. Store all receipts and invoices: This should be done by placing all receipts chronologically based on ‘expense category’ in separate file folders in a safe place, preferably a filing cabinet. It is important to note that all receipts and invoices should be kept for a period of at-least seven years before they can be discarded or stored off sight. This is mandated by the tax law also and should be maintained by all means. As such please ensure that your customers get a proper receipt from you when payment is accepted, and that all purchases or expenses invoices and inventory are stored as explained.
2. Try to do as much transactions through the bank and via usage of a cheque book: On many occasions where small businesses fall short in the ‘keeping of receipts and invoices column’, the act or notion of having a cheque book and bank account is most times their saviour to garnish some type of info. Hence, we highly recommend that some type of discipline is maintained in writing those cheques especially the cheque stubs that are attached to enhance clarity with the ‘category or type of expense’.
3. Download or buy an Accounting Software: This is primarily where the world is going currently. As such, the matter of installing and using an accounting software to capture your business transactions is highly recommended. Some of these are: Quickbooks, Cash Register Systems, Great Plains, Peach Tree etc. These software’s are determined for use based on the kind of business that you operate, thus speaking to a consultant or accountant before choosing one or two is highly recommended as well.
4. Employ someone to do it if you can’t: It is just that simple, most times as small business operators we are so deeply engaged with the daily activities of the business that we just simply ‘don’t have the time’. Thus, getting or employing someone to do the job is the best solution. Just ensure that this particular person has some type of accounting experience or background. Especially for the category of inventory counting.
5. Supplying FALSE information is a breach of the Tax Law or Act: Yes, we know this might make your tummies wiggle or shuffle a bit, but the statement is quite true. Any information submitted that is deemed false is subjected to a fine after an audit. And bear in mind also, that when there are no proper records, you’ll just leave the auditor to use margins and ratios based on the industry at hand. Thus, another really great reason to ensure that proper records are maintained.
6. Recording IMPROVES the making of Business decisions: You will need to make important decisions based on purchases, investments and cutting of expenses. Thus, what better way than doing this from having a pool of statistics and information at your disposal? Far too long we have been making decisions too brittle without no concrete proof of our actual numbers. Especially within the aspect of giving discounts. Let’s raise the bar by having actual numbers to know our ROI (Return on Investments) and also to determine our future Cash Inflows and Outflows.
For too long we have been ignoring these important aspects when it comes to recording. As such, let’s ensure that we do everything within our will to improve or implement these aspects as the future of our businesses are highly or most times determined based on how well we do and practice these things.
If you need help or further information, please feel free to contact us at 1 (876) 902-7259 | 545-6928 or email us at BIZcareConsultationAcct@Gmail.com to arrange your consultation session. Do remember at BIZcare “Your Business is our Priority”. We offer the services of:
- Business Registration
- Tax Filing
- GCT Filing
- Payroll Services
- Consultation Services
- TCC Services
And Others.
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Written by: Kmar Henry [ CEO |BIZcare Consultation & Accounting Firm Limited ]
Edited by: Sheryl Bailey [ Director | BIZcare Consultation & Accounting Firm Limited ]
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