Good record keeping is what makes or breaks a small business
If there’s anything I can recommend to small businesses it is to keep track of everything.
It will help in the long run, make everything easier. It can help with (and not limited to!) :
- Watch the progress of your business
- Financial statements
- Track sources of income
- Expenses
Business progress
Record keeping will show how your business is doing, if sales are increasing, what sells best/worst, and even what needs to change. Tracking these factors will ultimately lead to business success.
Financial statements
Taxes are a pain, but essential so you can stay out of trouble with the IRS. QuickBooks is a software that can make tax statements a little easier., but some knowledge of accounting. Microsoft spreadsheets can also work while your business is small. Report expenses and income to have accurate statements.
Sources of income
Keep a file of every client and project, what you are doing for the client, how much it is costing you, and how much you’re charging them.
Expenses
SAVE YOUR RECIPTS ! Some may be tax deductible like:
- Meals and entertainment: Business meetings at a cafe or restaurant can be nice and an easy way to engage your employees, just be sure to document it. With the receipt, record who came and the purpose of the meeting. It’s only 50% deductible though, so half on the government and half on you.
- Out of town business travel: If you or an employee travel out of town for business purposes, travel and accommodations are deductible, but it must meet the IRS Publication 463 to claim any travel deduction. Thankfully, your receipts can also provide a paper trail of business activities.
- Vehicle-related expenses: To claim a vehicle as a deductible, you have to prove that it is only being used for business purposes. Keep record where, when, and why you used the vehicle for business, and then apply the percentage of use to vehicle expenses.
- Home office: Portions of your home office can be deductible if you regularly use it for business purposes. Similar to the vehicle expenses, you need to find the percentage of your home is used. Remember, your home office must be either the location of your business or a place where you meet regularly with customers/clients.
Another inevitable expense is payroll. To keep track of this, at Provide we use Freshbooks, it fits us best. Our employees can log their hours and bill us an invoice at the end of the week, Overall it makes the experience easy and pain-free.
