financial records

Keeping Good Business Financial Records Presented by Tina Bunton

Priorities 1st Accounting & Bookkeeping Services

Why do you need to keep “Good” financial records?

 IRS – Preparation in case of an audit. (Your Burden of Proof)

 Financial Statements – To monitor the financial progress of your business. Help you in dealing with banks and/or creditors.

 Tax Returns – Keep track of deductible expenses and to support the items reported on your tax returns.

Organization is key to having “Good” financial records!

What kind of records do you need to keep?  Gross Receipts (Income)

§  Bank Deposit Slips

§  Invoices to Customers

§  Forms 1099-Misc Received

 Purchases (Expenses)

§  Canceled Checks

§  Invoices you’ve paid

§  Credit Card Sales Slips

§  Receipts

That’s not all…

 Other Items – Requires more than just a copy.

§  Schedule of your assets for depreciation purposes

§  Payroll records

§  Estimated tax payments

§  Form 1099-Misc issued to your contractors

§  Travel – Entertainment – Gift – Transportation (Mileage)

How should you keep your financial records?

 File Folders

§  Manual File Folders

§  Electronic Files (Scanner)

 Bookkeeping System

§  Manual (Excel Spreadsheet)

§  Computerized (Accounting Software)

Legible – Complete - Accurate - Reliable

Garbage in – is Garbage out!

How long should you keep your documents?  Business Documents To Keep For One Year

§  Correspondence with Customers and Vendors

§  Duplicate Deposit Slips

§  Purchase Orders (other than Purchasing Department copy)

•  Business Documents To Keep For Three Years

§  Employee Personnel Records (after termination)

§  Employment Applications

§  Expired Insurance Policies

§  General Correspondence

§  Internal Audit Reports

§  Internal Reports

§  Petty Cash Vouchers

§  Physical Inventory Tags

§  Savings Bond Registration Records of Employees

§  Time Cards For Hourly Employees

Business Documents To Keep For Six Years

§  Accident Reports, Claims

§  Accounts Payable Ledgers and Schedules

Accounts Receivable Ledgers and Schedules

§  Bank Statements and Reconciliations

§  Cancelled Checks

§  Cancelled Stock and Bond Certificates

§  Employment Tax Records

§  Expired Contracts, Leases

§  Expired Option Records

§  Inventories of Products, Materials, Supplies

§  Invoices to Customers

§  Notes Receivable Ledgers, Schedules

•  Business Records To Keep Forever

§  Audit Reports from CPAs/Accountants

§  Cancelled Checks for Important Payments (especially tax payments)

§  Contracts, Leases Currently in Effect

§  Financial Statements (Year End)

§  Insurance Records, Current Accident Reports, Claims, Policies

§  Corporate Documents (incorporation, charter, by-laws, etc.)

§  Mortgages, Bills of Sale

§  Retirement and Pension Records

§  Trademark and Patent Registrations

Final Thoughts   Invest in a Backup System

usb ports / offsite backup service

 Do your due diligence when looking for an accounting

software – Intuit’s QuickBooks is a great place to start.

 Expensify.com is a great phone application for storing

financial information….”Free”

 Remember – Ignorance of the IRS Requirements can be very

costly and just because you didn’t know doesn’t mean you

will get a free get out of “Penalty” pass.