Mind Your
Own Business

Keeping Business Records

In order to have a successful company, all business owners must keep records pertaining to their business operations. Government agencies such as the Internal Revenue Service also require business owners to maintain accurate records to prove the income and expenses claimed on tax forms. Although large companies may use a Certified Public Accountant, or CPA, to maintain business records, smaller companies can manage their own records with some education and training.

  • Gross Receipts: A business's gross receipts include income received from all of the company's operations as a whole including retail sales, service contracts, repair invoices including labor charges, sales taxes collected, rental fees, and any other form of income a company receives. Bank loans are not considered a part of gross receipts.

  • Business Expenses: Things such as office supplies, tools, travel expenses, vehicle payments, payroll, and insurance are all common examples of business expenses a business owner must document in their recordkeeping system.

  • Inventory: A retail store must purchase goods to sell and a plumber must have repair parts on the truck ready to use when needed. These products are called inventory until they are sold. Every business must keep records of their inventory on hand. Once the products are sold, they become part of the cost of goods sold (COGS).

Good Recordkeeping

The above are just a few examples of the most common types of business records that must be kept by business owners. These records are vital when applying for bank loans, filling out tax forms, and for occasional analysis by business owners to review how the company is doing and what direction it is going in. To help with recordkeeping, there are many choices in accounting software, hiring a bookkeeper, or using a CPA.

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