Recordkeeping Best Practices

July 31, 2019

Hi, it’s Donna. I wanted to talk to you about record-keeping best practices. I get a lot of questions in this area, so I thought it would be best to clarify a few things.

First, the best record-keeping idea I can give you is, do not co-mingle any business or personal funds, make sure that all of your personal bills are paid out of your personal account and not the business account. If you need to, you can transfer funds from your business account to your personal account and then pay the personal expenses. If you don’t have a business credit card, then use two separate personal cards and use one of them specifically for business.

If you co-mingle the credit card information, it makes it a lot tougher if you’re in an audit. And also if there are finance charges, you cannot deduct them. Next deposit, all your cash for business purposes into the business account. So you can track that revenue, keeping the cash there will. If you just keep that out of the drawer will lead you to trouble in an audit, and it will also devalue your business assets.

So when you sell your business, if you’re not capturing all the revenue of the business, you’re really just hurting yourself because that’s going to be a multiple of that cash. So, I know it’s tempting because you don’t want to pay taxes on the money, but there are better ways that we can solve your tax problems. So let us deal with that part and let’s keep your business honest and keep you out of trouble.

The next step, keep all your bank statements and your canceled checks for at least four years more if possible. I know that can get to be a lot of paper, but if you can scan it and keep it even longer, that’s great. Also, if you’ve ever seen those thermal receipts that come off the printer ink fades after about a year, year, and a half, that receipt is just a blank piece of paper. So if you need it for an audit, that’d probably be two or three years down the road.

So if you can scan those, if you want a solution for that, we also can help you get a solution so that all those receipts will be scanned and be proper documentation if you ever need them. Next, the IRS really does not require that you have a receipt for items that are less than $75. I don’t suspect. I don’t think you’ve got to just throw those all away though. I think you ought to keep them, but if you’re missing one, no fret, just make sure you have a record of what that expenditure was in some other format, even if it’s other than that original vendor invoice.

Keep these things a little bit longer, sediment statements from the purchase or sale of any property. You want to keep those for a good while, at least five years after the sale of the property. Also, if you purchase any fixed assets for your business, those would be things that last more than a year that is greater than $500. Pieces of equipment furniture, computers, keep those.

Lease documents and loan documents. You want to keep those until about five years after those are concluded. Also any purchase or sale of stocks, same thing for the purchase I know that’s hard, but keep those at least till five years after you sell that stock or mutual fund. That will save you a lot of headaches if you ever have to go back and typically those are big dollar items.

You can view a records retention document in the operations manual that’s located on your portal. If you want to see some more detail in this area. Lastly, I mentioned the services to help you manage receipts. We use shoe There’s also a Xero touch app for your phone that will allow you to snap a picture of a receipt and attach it to your accounting records. You can also just upload those if you want to scan them and directly into your Xero software.

So I hope those tips help. We will talk about some others in more specific areas and a few other videos. But if you have any questions on these, please feel free to let me know. Thank you. Have a great day.

Donna Bordeaux, CPA with Calculated Moves

Creativity and CPAs don’t generally go together.  Most people think of CPAs as nerdy accountants who can’t talk with people.  Well, it’s time to break that stereotype.  Lively, friendly, and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux.  They have over 50 years of combined experience as entrepreneurial CPAs.  They’ve owned businesses and helped business owners exceed their wildest dreams.   They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.