Over the years, we have seen a growing need to always prompt entrepreneurs or individuals on the importance of recording their business transactions properly. This often entails or involves the entrepreneur must ensure that some type of recording system is implemented. As such, this can be done whether manually or electronically depending on the size of the business. Thus, again, we have seen the need to outline some pointers that must be practiced when carrying out or recording these business transactions:
1. All sales transactions must be done in sequence and properly dated: The importance of this is always outlined by auditors as they will let you know point blank that if you don’t have a ‘numbered sequence’ which is attached to a date to properly trace or track your sale transactions, they will have to use other means of verifying your sales.
2. All customers must be handed a receipt: It may seem simple, but a lot of entrepreneurs are still making or guilty of this minor error as they just sometimes don’t have the time or more simply put; just can’t remember to issue a receipt. Especially when it comes to cross banks transactions. Please remember that your customers must be given a receipt that clearly shows the price charged, the date, and a receipt number, and even more so if you are deemed obligated to charge GCT.
3. All purchases or expenses must be recorded based on categories: When recording and storing your purchases or expenses, this should be done by placing all receipts or invoices within the right category or line item. For e.g.: a gas receipt should be stored in the line item of Traveling/Transportation and not with Utilities. This should be done in chronological order with its respective dates.
4. All purchase, expense receipts, or invoices by law must be kept for a minimum of seven (7) years: It is just that plain and simple. However, to be on the safe side we recommend that you even keep them for at least ten (10) years in the event you might need to rectify something with the Tax Office after an audit.
5. Ensure to photocopy your purchases, expenses receipts, or invoices if you see that they are fading away: This is a common problem that is faced when storing receipts. As such, it is highly recommended that you store a copy and staple the original copy if you see that this problem persists.
6. Please don’t throw away your receipts or invoices: Yes, we have seen the importance to ensure that we AGAIN make this KNOWN. Please keep all invoices safe for a minimum over a seven (7) year period.
7. Ensure to update your cheque stubs correctly with the necessary transaction details: Many entrepreneurs fall guilty with this pointer. As they simply just don’t remember to update their cheque stubs with the necessary transaction details. This is a pointer that may be a lifesaver within an audit process, as auditors can use these details to confirm expenses that were absorbed.
8. Be sure to capture Petty cash transactions: Whether it is paying someone to do some landscaping, buying gas to do delivery, or just paying someone to do some cleaning. Please ensure to have some type of petty cash system implemented to capture these transactions. What happens most times is that these miscellaneous expenses usually add up to be a hefty figure after the completion of the year and are easily overlooked because there is no trace of these transactions.
9. Keep an accurate and updated record of your Receivables and Payables: This information is always important, especially when it comes to compiling your financial statements for a loan or to gain access to a Credit Card. Please ensure to have these figures properly documented based on payments received from customers or payments made to suppliers.
10. Record all Asset purchases: Entrepreneurs tend to downplay the importance of this aspect, due to the fact that they are not knowledgeable of the capital allowances that can be claimed from the value of these assets. Thus, we strongly recommend that you implement a fixed assets register to show all these details. This register should include the type of asset, the date bought, and the value of the asset at the time of the purchase.
*It is strongly recommended to install electronic software to do your recordings. What you’ll realize is that it might be easier to capture these extremely important aspects as well as run reports per month to see the financial position of your business at any given point*. Especially when it comes to other things like inventory monitoring and stock count. You’ll definitely need to have some form of a reliable source to pull from to check these figures. With the added notion that you are obligated to do this according to the ‘taxation act’ which could see you being fined of up to $2M if you are deemed guilty of this breach after an audit is conducted.
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
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Written by: Kmar Henry [ CEO |BIZcare Consultation & Accounting Firm Limited ]
Edited by: Sheryl Bailey [ Director | BIZcare Consultation & Accounting Firm Limited ]