Why is organized accounting and record keeping so important to a small business?

Why is organized accounting and record keeping so important to a small business?

Accounting and record keeping for your small business is really, really important. Accounting for any business is important. It's important so that you don't lose track of deductions that you may be entitled to. We generally encourage people to use a computerised program. Most everybody has a computer or has access to one, and there are several out of the box, off the shelf programmes that function very, very well. We also encourage clients to set up files; payables files are very common. Set them up by vendor so if you write a cheque to ABC company or you write a cheque to Susie Jones, you have a file set up just for that. Staple your cheque receipt or write your cheque number and amount right on the voucher and file them. Every year take the files, put them in a box, send them off somewhere and start the new year over again. Those basic rules can really help insure that if you are, heaven forbid, audited, you can provide adequate backup for the deductions that you've claimed and the onus really is on the taxpayer to provide that back up. Cancelled cheques are wonderful back up; vendor statements are even better.