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| What are Some Simple Cash Record Keeping
System Procedures?
Here's some helpful information to help
keep track of your business records. Follow the steps described to
create a good record keeping system.
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* Use pre-numbered sales invoices or receipts
to track sales to customers.
* Maintain a separate bank account for your business expenses (versus using your
personal account). Reconcile your monthly bank statement for both deposits made
and checks written. This lets the bank do part of your record keeping for you.
* Pay for all business expenses using checks from your business bank account,
rather than from your personal bank account.
* Use your check register as a basic cash payments register. Consider investing
in simple spreadsheet-like columnar paper or a professional multi-column book.
You’ll get to pick out the column titles so pick ones that you generally will
use a lot, like merchandise purchased, salaries, utilities, and rent expense.
Enter in the last column as general expenses any payments that don’t fit one
of your other columns, and explain what they are.
* Enter money you take from your business which is not a salary, including
payments made for you by the business, into a column called draws. This helps
you know what amount of benefits in cash you have taken from the business during
the year. Always deposit all your customer payments to you in full in the bank,
whether received in cash or by check. Then, all you need to do to determine your
income at the end of the month/year is to add up all your deposits and match
them to your sales invoice totals.
* Using this basic system throughout the year for income and expenses means you
can just add up the columns and get the correct numbers for your gross receipts
and business expenses for your tax return. Also, this system helps you compute
your quarterly estimated tax payments.
* For additional details and explanations on record keeping, and a sample of
business records, refer to Publication 583.
Source: IRS.gov Business
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