Financial Recordkeeping

In order to run a successful and legal business, it is important to keep necessary financial documents to prove your income and expenses and to pay the proper amount of taxes. Use this quick guide to help you determine which documents need your attention.

Take a look at Bookkeeping Basics

Gross Receipts

Your company's gross receipts show the income you bring in and deposit into your business bank account. To avoid complications and to maintain more accurate records, it’s important to have a business account separate from your personal bank accounts. Supported documents for gross receipts include the tapes from your cash register, receipt books, invoices, and any 1099-MISC forms that your customers send you. Your gross receipts will include goods sold, labor, fees, sales taxes collected, and any delivery charges. Basically, it includes everything that you are collecting money on.


If you sell products to your customers, you must first purchase an inventory of goods and then replace those goods when sold. You will probably send a purchase order to your suppliers to make these purchases and then they will send you an invoice or set up a purchase account for you. A purchase account allows you to make one monthly payment for all purchases during the month. Your purchase totals including freight charges will be deducted from your sales totals to determine the cost-of-goods-sold. Manufacturers of products will include direct labor, overhead, and freight on materials.


Your business expenses are basically everything you spend money on to operate your business. If you have a retail store or other building, these expenses include utilities, rent, and maintenance. If you provide services with a vehicle, expenses will include vehicle payments, insurance, fuel, repairs, and maintenance. If you have an Internet-based business, your expenses may include website hosting fees, tech support, security certificate charges, and marketing. Of course there are other expenses involved in the above examples but basically, anything you spend money on to operate your business is considered an expense of which you should keep proper records.

Taxes and Fees

There are many types of taxes and fees involved in operating a business. If you have employees, you will have to maintain records for payroll taxes including federal and state, and local income taxes, social security taxes, disability insurance fees, and possibly other fees as well. Most cities will require a business to purchase a business license to operate within the city limits. This fee may depend on how many employees you have working for you directly. If you are a sole-proprietor, you will be required to pay a self-employment tax. This tax is basically income tax payments you pay monthly or quarterly to the federal government and is an estimate of taxes you will owe on your own annual income.

The above examples are some of the most common financial records business owners will need to keep. Sometimes it can be overwhelming to manage all these records and can take valuable time away from business owners who just want to take care of serving their customers. In this case, purchasing a good business accounting software program can help automate the recordkeeping process. Our business uses a local Rancho Cucamonga CPA firm to manage and organize financial records. A CPA can also help growing businesses analyze expansion possibilities and create accurate budgets.

A Business Responsibility

The bottom line is that all business owners must maintain accurate business financial records if they want their company to survive. Whether you decide to do your own financial recordkeeping or hire a professional bookkeeper, make sure that your recordkeeping is complete and complies with government requirements. Once you get the hang of it, it becomes easier and somewhat routine.