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Keeping books and records

July 09, 2009

To fill your cigar box you have to keep track of how much is in there. It's shocking how many businesses founder because they don't know where they stand financially.

A very small business should start with an off-the-shelf business accounting program like Quickbooks or Peachtree. You should either learn to use it or hire somebody who does. Make sure you keep your source documents, like receipts and purchase orders. You will need them to verify your expenses should the IRS come calling.

For some expenses, you need extra information with your records. For travel and entertainment expenses, you need to record the time, place, people involved and business purpose of the expense. If you use a personal car in your business, you should keep a daily record of your business mileage. When the IRS comes calling, you'll be glad you went to the trouble.

Next: Mind your payroll tax obligations

While the Tax Update takes its summer vacation, we are serializing my chapter in "How Business Gets Done: Words of Wisdom by Central Iowa Experts." You can buy your own copy at Lulu.com by clicking on the link.

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