As a small business owner, should you be keeping records or copies of:
- Bank statements?
The answer is: all of the above. You should be keeping any receipts, copies of your bank and credit card statements, and any information that will be used to prepare your tax returns.
What is Bookkeeping?
Bookkeeping is the keeping of a business’s financial records. It involves keeping track of your income, expenses, receipts, and balances in all of your accounts.
When we advise clients to follow proper bookkeeping procedure, they often ask:
- What is the easiest way to keep track of things?
- Do I need to get Quickbooks?
- I have a practice management software — that’s enough, right?
The type and size of your business dictates what specific bookkeeping and accounting system I recommend you put in place.
Before recommending a system, I typically ask questions such as:
- How many transactions a month do you have?
- Do you have a practice management system like SimplePractice?
- Are you keeping your receipts?
- Do you like DIY recordkeeping or do you hate manually recording transactions?
We recommend that you put a system in place to help you keep track of all of the above. It can be as simple as saving photos of receipts in a Drive folder and updating your Excel sheet each month. It can also be as automated as taking pictures of a receipt using an app that connects to QBO so it pulls a copy into your Quickbooks file before working through your income and expense items each month.
When you are just starting your practice, using a simple Excel sheet to record your transactions works well since you tend to have more time to do things related to data entry. I also always recommend keeping copies of your receipts for business expenses for up to three years after we file your tax return.
Boom — there is an accounting system for you.
You might be thinking, “well that sounds like more work then I want to do.”
If so, we do offer some alternatives:
This lets you take pictures of your receipts and then creates a spreadsheet for you. When you take the picture, the software asks what type of expense it is. This is super handy for those who don’t want to do a ton of data entry or go the Quickbooks route. We have a firm license for this software so we offer it to our clients at $45/year.
We recommend Simple Start for small businesses. It connects with your bank account and pulls transaction info automatically. You will need to classify each expense, but then you will be able to pull reporting to track your business expenditures and goals.
The above includes only a few options that are easily available.
TL:DR: The default answer is yes you should keep a copy of that. Setting up a recordkeeping system is an important step for your business.