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Getting Started
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RECORDKEEPING TIPS
Brigitte A. Thompson
It is important to establish a system of recordkeeping that works
for you. Some things need to be recorded daily, others can be
done weekly or monthly. It is imperative that you get into the
habit of saving and recording everything related to your business.
You will need to keep written documentation to account for everything
that goes into and out of your bank.
The income taxes you pay are based on your net profit. This profit
is determined by totaling your gross profit (actual money received)
and reducing it by your expenses (all cash/check deductions).
The more deductions you have, the lower your net profit, the lower
your income tax liability becomes.
One of the first things an IRS auditor should do is create a cash
analysis and compare this to the income and expenses reported
on your tax return. Obviously, if you received any non-taxable
income, it is to your benefit to note that information in your
records. Otherwise, the IRS will need an explanation of where
that money came from and after a few years have passed, it may
be hard to recall this information.
It is a good idea to itemize every deposit you make right in your
check register and record every check or bank withdrawal as well.
It cannot be mentioned enough: SAVE ALL RECEIPTS.
Without the receipt, you really do not have a justifiable business
deduction. There are many legitimate expenses related to the operation
of a daycare business and many of them are overlooked. In order
to hang on to your money, you need to utilize all of the deductions
applicable to your business.
All information is based
on the current federal tax laws of the United States. Since these
laws are subject to change, neither the author nor BusyParentsOnline.com
assume liability for modifications that occur after the creation
of this work. Every effort has been made to ensure this information
is as accurate and complete as possible. These articles contain
general information for businesses and are offered as an overview
of the law.
© 2003 Brigitte A.
Thompson
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