Every small business person has to face up to it: keeping financial records. Most of us would do anything to avoid having to set up an accounting system!
Here’s my simple rule: Don’t track anything you don’t have to.
- Do track data that helps you make better decisions.
- Do meet all legal requirements.
If you won’t use the data to make better business decisions or to meet legal requirements, why are you spending time to track it? You might be surprised the level of detail some small businesses keep, but never refer to!
What records do I need to keep in my small business?
In the USA, get out the tax form you will file, and see what income and expense categories it asks for. Please note, it is worth it to invest in a little time with an income tax accountant to figure out what parts apply to your business and whether you might have any other legal requirements. Make sure you research the regulations from each agency your business must report to, like your state tax commission or department of revenue.
Once you know the categories, keep receipts and totals for those items.
“Meat and Potatoes”
The specifics of implementing these ideas will be part of a series on simplified accounting. First up will be side businesses and micro enterprises.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.