Bookkeeping Tips for Startups
It is important to start keeping detailed records of your transactions once your business begins to receive income. Prior to that time you may use an excel spreadsheet to keep track of your expenses. The IRS allows you to deduct up to $5,000 of start-up costs and amortize the remainder over 180 months once the business begins operations.
Once your business receives income, you will need to keep supporting documentation for your sales, expenses, and assets. Sales documents may include cash register tapes, bank deposit slips, receipts books, sales invoices, and credit card charge slips. You should maintain monthly files of your sales and reconciles your credit card reports with your bank statement.
For expense items you will need to keep records of the amount paid and the nature of your purchase. Purchase Documents will include cancelled checks, cash register receipts, invoices, credit card slips, vendor statements and petty cash slips for small cash payments. You should maintain files by category. For instance you will need separate files for supplies, insurance, phone bills, etc. I recommend that you have a business credit or debit card to provide proof of purchase. This will enable you to accurately track all expenditures. You should also keep copies of bank statements and cancelled checks that support your purchases.
The last category is asset documents. Asset documents are for large purchases such as land, buildings, machinery, equipment and furniture. Assets also includes inventory. Inventory includes items that you purchase that you plan on reselling to the public. At the beginning of each year it is important to value the cost of your inventory that was unsold as of the end of the previous year. Inventory that cannot be resold should be excluded from this calculation. Supporting asset documents include purchase invoices, canceled checks, vendor statements, real estate closing documents etc. You should maintain a separate file for each asset.
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