financial records
TRANSCRIPT
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Keeping Good Business Financial Records Presented by Tina Bunton
Priorities 1st Accounting & Bookkeeping Services
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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.
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Organization is key to having “Good” financial records!
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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
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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)
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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!
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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)
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• 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
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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
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• 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
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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.