Keeping accurate records is imperative to business success. The most important reason is to see any trends that may be taking place. This will allow you to see what is happening. Are sales going up or down? What about expenses? If sales are going down and expenses are going up, you have a very big problem. Without accurate records, you have no way of knowing what’s going on in your business.
Another reason to keep accurate records is for your income tax reporting. Proper record keeping allows you to easily access and verify your records. Without proper record keeping you have no way of knowing.
Do you need an accountant?
You should have a relationship with a good CPA that knows your industry. Someone you can count on to give you accurate tax advice. You do not necessarily need to use them for everything, but you should definitely consult with them on what you should keep and how it should be recorded. You may also want to have them do your payroll.
What type of software should I use?
You should use the one you are comfortable with. If you are not comfortable with it you won’t use it. If you don’t use it you will not have accurate records. And if you don’t have accurate records, you don’t know what’s going on in your business. With software you have the option of installing it on your computer or using an online service. Quickbooks has both options available. The advantage of using an online version is that you can give access to your CPA.
The important thing to keep in mind is that this is your business. While there are some legal requirements by the IRS, those are not as complicated as most people make them out to be. The main thing is to create your recording system in a way that means something to you. At the very basic level you will have income and expenses and what’s left over is profit. You can get a little more adventurous and start separating your expenses into different categories like rent, electric, water, insurance, phone and other. If you have a service company that provides different services, you can break out the income into each service. That gives you a little more insight into your business.