Accurate and thorough record-keeping is a necessity for a successful business. It provides you with the data needed to identify strong and weak cycles, your business assets, and your income and expenses. You’ll also need current records to prepare financial reports. Proper recordkeeping will help you prevent under- or over-paying your taxes. These records are also extremely important in the case of an audit by the IRS.

Financial records should include income, income projections, accounts receivable and their balances. Record the amounts you owe for utilities, rent/lease, merchandise, equipment, advertising, payroll, payroll taxes, facility maintenance, and benefit plans. Indicate how much cash is used for inventory, how much cash is on hand, which products are turning a profit, and your gross and net profits.

The most basic record keeping system would be a journal which contains transactions, payroll records, accounts payable records, inventory records, and petty cash records. An accountant can help you create a full recording keeping system, and teach you how to update these records.

Financial records are very important, as they are the basis for your financial statements and tax returns.