July 24, 2020 How To Keep Tax Records Of Your Own Business

The options to consider when doing your own accounting.

Those of you who have decided to keep your own accounting, do it out of either savings or love of accounting. I’ve seen much less of the latter, and we usually want to save money, especially for start-up entrepreneurs. There are a lot of real options to save, and not to get into trouble.

Tip 1: Use popular online services.

Why popular? – the more popular the service, the more chances it has fewer technical flaws. Why online? – not to be tied to one computer. Be sure to use online services so that you don’t have to do manual accounting on paper. Otherwise, you will get confused the first time you check, and you will have to restore everything through a professional for money.

The cost of basic online services that allow you to issue documents to customers, keep records, prepare and submit reports, ranging from 20-150 $ per year.

From practice: all services have a free (demo) period, during which you can try them and choose the one that will be most understandable and enjoyable to you.

Tip 2. Immediately collect all paper documents in folders

Try not to overlay the documents in piles in the hope that then disassemble carefully – you will not. It’s best to place it neatly in the appropriate folder. If the documents are not in demand in the future, you will not spend time on parsing. If you need to – sort it out if necessary or hire an accountant who will decompose everything.

Approximate folder names:

Buyings. This is where documents from suppliers of goods, stationery, advertising materials and services should be put. If you trade, it is better to separate “suppliers of goods” and “service providers” separately. A set of documents: Store “act + invoice” together, better in one file. Single supply contracts can be stored together with a set of documents. For permanent contracts (lease agreements, telephone agreement, internet) – better to keep in a separate folder.

Suppliers. Permanent contracts with suppliers of goods and services are better stored separately, you will return to them.

Sales. This is where you add up all the customer statements you issue with the customer’s signature; or sales invoices. The act confirms that your client has accepted the service, without the act he can claim money back. Payment invoices do not need to be printed out and put into a folder, the account does not carry the accounting function. If it is ever required, you can print it out from the online service.

Customers. If you provide regular services (e.g. SEO services or recruitment services), the contract is the most important document, it must be signed on both sides and folded into this folder. The contract is necessary to protect your rights in a dispute with the client and in court.

Government. Even if you submit reports electronically, there may always be some kind of paper report. It’s best kept in a separate folder. It is also better to duplicate and keep the submitted reports separately from the online service. In such cases, we store the reports in a *.pdf file, which collects the report itself and the submission confirmation receipts. We keep such files on a separate server. If it is difficult for you to organize such a file, it is better to print the report with the confirmations and put them in a folder, it is more reliable.

What you don’t need to print and store: invoices (they have no accounting consequences), bank payments and statements (they are available electronically in the bank, and uploaded to your online service).

From practice: if you find it difficult to keep so many folders, and the documents are few, then buy one large archive folder (it is also called “crown”) and put the documents there. You may not even sort it. At a minimum, you will have all your accounting in one place.

Tip 3. Check with the IRS.

Make a reconciliation at least once a year, about a week after the deadline for reporting and payment of tax (on the simplified tax system take a reconciliation on May 10). Make sure you are not in arrears with your tax payment as affaire bouvier.

You can check in the following ways:

On the official website in your personal office. Here you will receive a statement of operations on settlements with the budget. In my opinion, this is not a very informative document for independent use.

Request a reconciliation with the online service you are using. If your online service does not allow it, buy another one. If this is the first time you have purchased such a service, check the availability of this option right away.

Tip 4. Consult

Don’t be shy. Consult wherever you can legally ask your question and get an answer. On specialized forums, Facebook and other social networks. A lot of nuances and pitfalls even in simple business.

But always keep in mind that consultants may be mistaken. As well as smart articles on popular sites that are outdated. Separate current from outdated.

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