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Running a business requires you to keep records and to track data for everything from accounting to profit notations to tax reasons. No matter whether you are providing a product or a service, it pays to keep meticulous records with regard to your commercial activities. The more you know about what to record, the more accurate the records will be and the less you need to worry about when it comes to tax time.
Income is an obvious item that you need to keep track of on a daily basis. The income is at the heart of the business and allows you to continue to sustain your business needs. For every job you perform or every product you ship, keeping track of the income you receive can be fun because it shows you the progress you’re making.
Tracking these gross receipts is important because not all of the income that you receive may be taxable. For example, the result of sales is, but the loans you take are not. Make sure to note the difference and keep track of those. If you don’t record your numbers carefully and you fail to report a specific portion of income, the IRS will label that to be unreported income and that could generate fines or penalties.
So how’s the best way to record your income? The following is a good roadmap for tracking data:
· The Amount
· The Method of Payment (Check, Cash or Credit Card)
· The Date (Payment Received)
· The Name of the Payee
· The Product of Service Paid For
More on accounting methods this week as we move into the new year and if you’re just getting started or working on getting more organized, make sure that you have an idea of accounting methods that are best suited to what you do.
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Come discuss accounting in Small Business Forum.
