One of the biggest problems we see is the self-employed taxpayer who tries to do everything himself, including keeping his business books and records.

This almost always fails.

If you are thinking about starting a business, don’t do it unless you or someone in your employ understands the basics of proper record-keeping and accounting and has the time to do it properly. 

Example:

Let’s say you want to start a roofing business. You know everything there is to know about roofing because you’ve been doing it for years. You even have several developers who have committed to give you their roofing work.

Great! You certainly can’t run a successful business without customers.

But knowledge of your business and a customer base are not alone sufficient to ensure your the success of your business.

You still need to have a system in place that will allow you to estimate your expected contract costs and needed profit margins. This simply cannot be done without proper and timely record keeping.

But aside from the fact that bad or inadequate record keeping can cause a business to lose potential revenue and increase its costs, sloppy books often result in a failure to comply with IRS and state tax laws.

And even if you did somehow manage to comply with the tax laws, poor records can come back to haunt you if you are audited by a taxing authority and asked to prove that compliance.

Here is what you need to have in place at the outset of your business in order to ensure proper record keeping and tax compliance;

• A basic acccounting software program like Quick Books or Quick Books Pro
• A separate business bank account
• Either an in-house employee experienced in bookkeeping and familar with accounting software programs or an outside accounting firm that will do your accounting work for you