As the owner of your own company, many responsibilities will suddenly fall into your lap. Record keeping is one of these responsibilities, and it is critical for even the smallest business. Here is a helpful list of the most important things that you will need to keep track of as a new business owner.
1. Receipts. Keep all of the receipts for purchases you make for your home business. These purchases include office supplies and equipment, from paper clips to PCs. You will also need to keep copies of all the bills related to running your home business, such as Internet service provider fees, phone bills, membership fees, and any other costs that arise from running your business. You will need these receipts and copies of your bills for tax purposes to deduct these as business expenses.
2. Rent, mortgage interest, and utilities. When you run a business out of your home, you may be allowed to deduct a portion of your rent or mortgage interest and a percentage of your utility payments as business expenses. Save cancelled checks or receipts to document your rent or mortgage payments, and keep copies of your utilities bills.
3. Advertising. You may be able to deduct the money you spend on advertising your business. Save receipts from these costs in order to prove how much you have spent.
4. Professional fees. If you have hired a professional to help you with your business, such as an accountant, attorney, or a consultant, you may be able to deduct their fees. Save receipts for these services so you will have an accurate record of how much you have spent.
5. Employee records. If you have hired employees for your home-based business, you will need to keep track of their hours. You will need this information to calculate salaries, taxes, and the W-9 forms you will send out at the end of each year.
6. OSHA Records. If you employ more than 10 people in your home-based business, you will need to keep records that are specified by OSHA, such as accident reports, time elapsed without an accident, and other records.
7. Accounting. This is the most time consuming area of record keeping for a home-based business. Keep copies of all of the transactions that you have processed. You will need this sales data to prove your income. If you only keep one set of records, this is the set you need.
Remember: If you want to deduct it, you will need to prove it. It can be inconvenient to save this much paperwork, but you will be grateful come tax time. The money you can save justifies the extra time and energy you will spend keeping good records.