Why Keep Good Records While Bookkeeping in Springfield Missouri?
To keep your business organized and running smoothly, you must keep good records. Accurate and organized record keeping can save you time, energy, and headaches when it comes time to start thinking about your business’s taxes.
Receipts and Their Sources
Using excel, online services, or even just receipts in a filing cabinet can help you keep track of what purchases and transactions were made throughout the year. The types of documentation that is included in this may include items such as bills, credit card receipts, mileage logs, or invoices.
These records can help you identify sources of transactions. This valuable information will come in handy when identifying business receipts from individual’s personal receipts. Also, it will help you distinguish your taxable income from non-taxable income which will become very important in the chance that your business is audited by the IRS.
Deductible Expenses
Accurate records help support claimed deductions. You will need this information in the chance of an audit and should keep track of deductible business expenses as they occur to maintain correct records. You will most likely find this information in the same records you monitor your business’s financial status and progress through balance sheets, income statements, and the receipt examples above.
Record Retention
How long should your business keep records? The desks or filing cabinets in your office may be swamped with records and you might be wondering how long you are supposed to keep them around.
The IRS can pursue your business for failing to report accurate income for up to six years after filing taxes if you the amount is greater than 25% of your business’s gross income. So it may be beneficial for your company to keep financial records for six to seven years. The IRS also suggests that you keep employment tax records for a minimum of four years.
It is important to maintain accurate records while bookkeeping in Springfield Missouri. Though it may seem like wasted effort and space at the time, you will appreciate the extra work and time saved during tax season. If you have any questions regarding what records your business should keep for bookkeeping and tax purposes, please contact us at Schultz, Wood & Rapp, your Missouri bookkeeper.
