Tax Strategies for Business Owners
SmallBusiness Accounting - Complete
and accurate financial record keeping is crucial to your business success. Good
records provide the financial data that help you operate more efficiently.
Accurate and complete records enable you to identify all your business assets,
liabilities, income and expenses. That information helps you pinpoint both the
strong and weak phases of your business operations.
Moreover, good records are essential
for the preparation of current financial statements, such as the income
statement (profit and loss) and cash-flow projection. These statements, in
turn, are critical for maintaining good relations with your banker. Finally,
good records help you avoid underpaying or overpaying your taxes. In addition,
good records are essential during an Internal Revenue Service audit, if you
hope to answer questions accurately and to the satisfaction of the IRS.
To assure your success, your
financial records should show how much income you are generating now and
project how much income you can expect to generate in the future. They should
inform you of the amount of cash tied up in accounts receivable. Records also
need to indicate what you owe for merchandise, rent, utilities, and equipment,
as well as such expenses as payroll, payroll taxes, advertising, equipment and
facilities maintenance, and benefit plans for yourself and employees. Records
will tell you how much cash is on hand and how much is tied-up in inventory.
They should reveal which of your product lines, departments, or services are
making a profit, as well as your gross and net profit.
The Basic Recordkeeping System
A basic record-keeping system needs
a basic journal to record transactions, accounts receivable records, accounts
payable records, payroll records, petty cash records, and inventory records.
An accountant can develop the entire
system most suitable for your business needs and train you in maintaining these
records on a regular basis. These records will form the basis of your financial
statements and tax returns. For
no obligation free consultation contact us today!
Amare Berhie, Tax Accountant
612-282-3200
866-936-0430 Toll Free
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