When most small business owners think about getting audited, it is enough to make them cringe. Organization is the best way to avoid an audit. While that might sound easy, it is much harder than you think to keep things neat and organized if that isn’t one of your strong suits. Mark Dicus & Company is here to share some tips that will hopefully help you stay more organized and help you avoid an audit.
Clean Up Your Books
The first thing that you need to do is keep clean and organized books. There is no way to keep it all straight without a rhythm. Trying to remember things to write down and record later never works. Make sure you’re keeping a clear record of your income and your expenses. You also need to make sure you are categorizing your transactions so you can find them later. Another tip is to reconcile your accounts in a timely manner to keep your books neat and tidy.
Keep Personal & Business Expenses Separate
It is essential that small business owners keep their personal expenses and their business expenses separated. You need to set up different accounts for the business and your personal expenses. You should never use credit or debit cards for your business accounts to pay for your personal expenses. It creates a mess when it comes to your books. It will save you time and effort in the long run.
Keep Your Receipts Straight
Whenever you have receipts from business expenses, it is vital that you keep them organized. It is helpful to categorize them as you figure out a filing system. This will make things much less painful if you do find that you are audited down the road. You can purchase programs that help you do it digitally which can save you a significant amount of time.
Retain All Documents & Records
If you are like most business owners, there are several documents that are needed to keep your business running. This could include permits, contracts, licenses, financial transactions and more. Make sure your physical documents are stored in a secure place, and come up with a way to store your digital documents to help you keep them organized.
Create Good Daily Habits
The more consistent you can be with your daily habits, the better off you will be. Make sure you’re setting aside time frequently to go through your transactions and to review your financial records promptly. You should also find a way to keep your email and correspondence organized as well. This will help in the record keeping process. As soon as you receive any digital documents or receipts, make sure you’re filing them promptly.