A guide for small business record keeping

MAT-SU -- Taxes, insurance, monitoring progress, there are many reasons to keep an accurate collection of business documents close at hand. But one of most important reasons for accurate record keeping, says accountant Jean Sheffield of Carney and Associates LLC, is so that a business owner can make informed decisions about his or her business based on the data collected from those documents.

"It's very hard to make an informed decision if you don't know where you are at," said Sheffield at a record keeping seminar at the Mat-Su Small Business Development Center this week. "Every one needs to keep a certain amount of records."

By keeping records and using those records -- or having your accountant use those records -- to evaluate a businesses performance, a business owner can get an idea of exactly how his or her business is doing.

"The sooner you know you are losing money, the sooner you can make a change," Sheffield said. Aside from keeping income tax records for three to seven years, there are a number of suggested documents a business should keep to make both tax season and business decisions much easier.

Gross receipts. Businesses should keep things like cash register tapes, bank deposit slips, receipt books, invoices and credit card charge slips.

Purchases or assets: Businesses should keep canceled checks (or copies of canceled checks) cash register tape receipts, credit card sales slips, invoices and purchasing documents.

Expenses: Businesses should keep canceled checks, cash register tales, account statements, credit card sales slips, invoices and petty cash slips for small cash payments.

Permanent documents: Businesses should keep all business licenses, IRS and state filings, contracts, partnership agreements, incorporation or LLC papers, and personnel records such as I-9 forms, W-4 forms and the employment application. These should be kept even after the employee no longer works at the business.

Each business owner will have to figure out what documents should be kept and which should be discarded, Sheffield said. She suggests taking pictures of large or expensive equipment to prove ownership for insurance purposes, but also says the amount of records kept also depends on the space available and the type of business.

Record keeping is an individualistic exercise," Sheffield said. "You have to keep what is important to you."

Sheffield suggests that however you keep your records, try to have some order to it to keep the costs down during tax time. The less organization that she has to do, the less money is charged to the business. Some records can also be scanned and kept on disk, allowing for more room in an office and less mess during tax season. She warns, however, to have a back-up disk somewhere other than the office, such as a safe deposit box; some paperwork, such as insurance paperwork, should also be kept at a safe, off-site place.

Sheffield and other local professionals share their time and knowledge on a regular basis at the Mat-Su Small Business Development Center. For more information on classes, please call 373-7232.