Maintaining accurate financial records is critical for your company’s success and compliance. The specific records you must keep will vary depending on the type, size, and location of your business.
Here are some common financial records that most businesses should keep:
Income Statements (Profit and Loss Statements)
These documents detail your revenue, expenses, and net profit or loss for a given period (typically monthly, quarterly, or annually). They assist you in understanding your company’s financial and Accounting health.
Cash Flow Statements
Cash flow statements track the flow of money into and out of your company. They are critical for managing your liquidity and comprehending how your operations impact your cash position.
Bank Statements
Keep track of all of your company’s bank accounts, including checking, savings, and credit card accounts. These statements detail your financial transactions in great detail.
Receipts and Invoices
Keep copies of all sales receipts, customer invoices, and business expense receipts. These documents serve as evidence of your income and deductible expenses.
Expense Records
Maintain a detailed record of all your business expenses, categorising them by type (for example, rent, utilities, office supplies, advertising, and employee wages). Receipts, invoices, and payment records are all examples of this.
Tax Records
Keep copies of all tax returns you have filed, including federal, state, and local returns. Maintain all supporting documentation used to prepare your tax returns as well, as tax authorities may request it during audits.
Employee and Payroll Records
Maintain payroll records, such as timesheets, payroll tax records, and employment contracts, if you have employees.
Asset and Depreciation Records
Keep track of the purchase and depreciation of business assets like equipment, vehicles, and real estate. These records are necessary for calculating depreciation and determining the value of your assets over time.
Legal and Business Structure Documents
Keep copies of your company’s formation documents, contracts, licences, permits, and any legal agreements that apply to your company.
Insurance Records
Keep track of your company’s insurance policies, including premiums, coverage details, and any claims.
Bank Loan and Financing Documents
If you have taken out loans or secured financing for your business, keep copies of loan agreements, repayment schedules, and related documents.
Inventory Records
Maintain records of inventory levels, valuation methods, and cost of goods sold (COGS) calculations if your company deals with inventory.
Sales and Purchase Records
Keep track of all sales transactions, including sales orders, purchase orders, and contracts with customers and suppliers.
Mileage Logs
If you use a vehicle for business, keep a mileage log to track mileage and expenses related to business travel.
Retirement and Investment Account Statements
Keep track of account statements and investment activities if you have retirement accounts or investments related to your business.
It’s important to note that record-keeping requirements may vary by country and industry. Consult with a qualified accountant or tax professional to ensure you are complying with all relevant regulations and keeping the necessary records for your specific business. Additionally, to help streamline record-keeping procedures and lower the risk of errors, think about utilising accounting software or cloud-based accounting solutions.