A Simple Method for Keeping Good Records

Every business owner is required by the IRS to keep records of their business. The IRS does not lay out specific criteria, except that your records should accurately show your income and expenses.

Several software programs featuring online spreadsheets and templates are available for use on your home computer. A friend of mine uses Big E-Z Bookkeeping systems and has noted to me that it is user friendly and inexpensive. Find out more at:

http://www.bigez.com

In contrast, the other option for bookkeeping is to keep written records. Personally, I keep manual handwritten records in the event that my computer were to crash.

I use the Dome Simplified Monthly book. Available at most general retailers and any office store. You can also read more about it here:

http://www.domeproductsonline.com

Basically, throughout the month, I record each sale and each expense for my business. I also print out each invoice and put it in the back of my Dome book. At the end of the year, there is a pull out section that summarizes the entire year for me to prepare my taxes (or give to my tax preparer.)

Another important part of keeping records is saving the receipts from all expenses. I use a small manila envelope. On the outside of the envelope is my business name, and the year. This is extremely important because many business expenses can be deducted or depreciated. For example, if I decide to add clothing to my product line and purchase a sewing machine, this item may qualify for a tax deduction (based on many factors.) Without a receipt, there would be no proof.

Lastly, boutique business owners should keep a record of any substantial driving that is done for business purposes. Dome products also feature mileage logs, but I use a small calendar that fits easily into my purse.

In summary, if keeping written records, you will need: 1) A book to record income and expenses 2) An envelope for receipts and 3) A mileage log.

Copyright, 2007, Inch By Inch Designs 

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