Small Business Record Keeping

Small Business Record Keeping By Stephen J. Ganns, CPA{3:48 minutes to read} We often get questions at our accounting firm from our clients, especially our small business clients, regarding what kind of records they should keep, how they should keep them, and so forth.

Many times with a small business, either the owner keeps their own records, or their spouse/significant other keeps the records. These people may be trained in their own business, but not necessarily in record keeping.

Here are a few simple guidelines for what a small business person should do to minimize the hassle of keeping good enough records so a professional doesn’t have to come and redo them. This is an unnecessary cost.

Credit Cards

Small business people will ask if they should get a business credit card. In a perfect world, the answer would be “yes.” Many times, though, with a startup small business, that’s not possible. There’s no credit history so they may not be able to get a credit card.

I tell my clients they can use one of their personal cards for business and designate it ONLY for business – it makes record keeping easier. If you mix business and personal transactions, and give the statements to your tax preparer at the end of the year, that’s more work that he or she has to do. Therefore, you will be charged higher fees to separate the personal from the business.

Checking Account

The same ideas apply to a checking account. Open a business checking account that you only use for business. For the reasons stated above, your records will be cleaner and easier for your tax preparer to review.

What about expenses that are both business and personal?

Many expenses for a small business, such as cell phones and/or home internet usage, are both business and personal. These expenses should be paid from the personal account, as well as any other home expenses.

For businesses that only have a home office, the actual home office itself falls into this group. When you present your records to your tax preparer, they can allocate percentages of home office, internet and telephone usage.

Record keeping is not a monumental task, although poor record keeping can create monumental tasks for your tax preparer. Remember the three magic words of record keeping: Separate, Separate, Separate.

If you have any questions, please talk to whomever you use to guide you in small business record keeping, your tax preparer, or you can call us at Stephen J. Ganns CPA, 914-682-7007.

 

Stephen J. Ganns

Stephen J. Ganns, CPA
914-682-7007
steve@gannscpa.com
www.gannscpa.com

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