Sunday, October 21, 2007

Smaller business can use smaller bookkeeping system

Question: I just have a very small and simple business. My husband and I are the only people involved in it. Do I have to have elaborate recordkeeping with monthly and year-to-date statements, a monthly/Y-T-D cash flow and balance sheets? Isn’t there some simpler system or approach?

Answer: As long as you pay all your state and federal taxes on time and have enough to pay all your business and personal bills on time plus a little extra, your accounting system can be on the back of an envelope or two. However, you must save the envelopes so that your calculations, income and expense records can be understood and verified should any taxing bodies choose to audit your returns.

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