Organizing and Reviewing Your Records

The tax deadline of April 18th is now behind us, summer is just around the corner. Now is the opportune time to “Spring Clean” by organizing your recordkeeping, audit trail process, and record retention procedure.

Below are a few items to help you be prepared:

• Having an audit trail is in place to substantiate deductions.
• Review internal controls and segregation of duties such as: check writing, bill payment, deposits, and end-of-month reconciliation.
• Review your Record Retention policy.

Ensuring you are organized in these three areas and having your bases covered is vital for sound internal operational systems to monitor cash flow and cash coming in and out, effectively.

Below are valuable tips to make sure you have solid internal accounting procedures in place

1. Save your receipts – a bank statement or credit card statement is not enough. Write the business purpose, who you were with, and what is discussed, on the receipt. If you go to the local business supply store for office supplies, the IRS doesn’t know if any of it was personal or business. A receipt is required to justify the deduction. Without it, they can write off the loss in an audit. An IRS auditor once caught a restaurant owner who had beer shipped to his house instead of the restaurant for personal consumption.
2. Do you have a receipt/expense organizers for you and your team to record receipts on the go?
3. If you miss a receipt, are you using a payout voucher to document the expense as a “receipt” in its place? The IRS will honor these up to $75 each, but don’t make a habit of it. For payout vouchers, contact our office for a supply.
4. Are you tracking vehicle mileage? By hand or app? You must record the purpose of the trip, the number of miles, and the beginning and ending odometer reading.
5. Do you have a way to make sure deposits that are not sales, don’t get classified as such?
6. Is the person making the deposit and check writing the same person doing the bank reconciliation? Or, is there an outside person doing the bank reconciliation? Do you still review your bills and bank statement monthly? Do you check your online business account daily to make sure everything’s running through the account that should be? Remember, business accounts don’t have the same consumer protections personal accounts do. Reviewing your reports daily is essential for security to ensure your money is safe.
7. Do you have a folder to keep all your end-of-year tax documents organized? W-2s, home mortgage interest, qualified medical expenses, 1099’s, and prior tax returns?
8. Have you took steps to protect yourself with cyber security measures?
9. If you have numerous checking accounts or credit cards, is there anything you can streamline, eliminate, or reduce them? Any personal items that should be separated  out of the accounts?
10. Are you keeping your records for the appropriate amount of time and having a designated space to put things quarterly or yearly? For example, your monthly or quarterly receipts or your tax material at the end of the year are always in one easy place to reference if needed.

These 10 tips can help you reflect on what you might want to do for a spring or summer project to get organized. If you have any questions about streamlining the financial processes in your business contact us by clicking on complementary consultation option under the contact tab; to set up yours today! .