Bookkeeping – Some Important Things To Keep
Business bookkeeping can be a challenging task. Knowing what to keep and for how long can be the difference between a smooth operation or a bunch of headaches. Basically in bookkeeping you at least want to keep what is called your general account books that will cover everything. However, due to the nature of some transactions and their impact on things such as taxes, you will want to keep special books for these.
Things such as your car, entertainment, travel have special accounting needs that may impact on your level of taxes. Basically for expenses in these categories the type of information you will need to keep are the following:
- Your car. If you use your car for business, you will need to record the miles traveled for each trip, date of the trip; costs associated with the trip,; and the purpose of the trip.
- Gifts to business clients, customers. Reason for the gift; business relation to you or your business; date the gift is made; cost of the gift.
- Entertainment, including meals. Name and address of where the entertainment takes place; reason for the entertainment; cost; benefit to the business of this entertainment.
- Travel that does not involve your car. Date of travel; mode of travel; travel destination; purpose of travel; cost of travel.
As should be evident, these records are meant to serve as justification for the deducting of certain business expenses associated with each class of activity. Keeping detailed records at the level indicated is very important tin being able to justify appropriate tax deductions associated with these.
Bookkeeping involve more than just the recording of business transactions. It also involves keeping substantiated documents to back up these transactions. Some of these include the following:
- Cancelled checks; purchase and sale invoices; credit card slips and statements; employees’ withholding allowance certificates (Form W-4); time cards or slips; restaurant or catering receipts; any log book associated with financial transactions.
Any documents associated or in the above classification could prove extremely important in substantiated any entry on your tax return so it is extremely important that you have suitable storage and filing facilities for these to keep them secure and handy.
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