The Work At Home Link Blog

Posts Tagged ‘record keeping’

Keeping good business records is an important part of owning a home business. You need to be able to document how much money is coming in and how much is going out for several reasons:

• You need a clear sense of whether your business is actually making a profit. It’s only by clearly seeing your business trends that you can make decisions such as whether to invest more, spend less, or change your strategy.
• You need to be able to document your income for tax purposes.
• Good business records will be required if you seek outside financing. The larger your business grows, the more documentation will be required by outside auditors and investor.

For many business owners, record keeping is one of the less pleasant aspects of running a business. But if you develop good habits of organization early in the game, you won’t find yourself digging through mountains of paperwork at tax time.

Here are some basic tips for keeping good business records:

1. Open a separate checking account for your business and keep business transactions separate from personal transactions.
2. Keep receipts and invoices in a folder labeled “Expenses”. Also create clear documentation of any cash transactions. Expenses included advertising, bank fees, licenses and permits and inventory.
3. Document all income in a spreadsheet or a separate folder labeled “Income.” Track any cash or checks received as well as PayPal payments.

Spreadsheets are a great tool for documenting income versus expenses. Consult with a tax professional to find out what expenses should be tracked besides those listed above. Get in the habit of filing and recording transactions daily

Keeping good records is the only way you will know for sure whether your business is actually making a profit.  Good habits developed early will ensure that you are able to stay on top of your business decisions at all times.

Technorati Tags: business records, record keeping, Work At Home, work at home business