The most important thing any business can do is keep accurate records. Every entrepreneur is great at the job or service they perform and will work day and night perfecting their skills, however they tend to put record keeping at the bottom of their to do list! If the bad habit of poor record keeping does not cause their business to eventually fail, it will impede the company from growing.

QuickBooks is the one computer program that every start up company should have. It is easy to use and has the ability to not only help you keep your records straight but can be the perfect tool for forecasting the growth of your company, and recognizing business trends that you have never noticed before.

If you do not have an accounting background it is important that you either study the user guide of this program, hire an accountant to set it up for you, or have your business coach set it up. If your business coach does not know how to set this easy program up for you, do yourself a favor and get a different business coach.

Schedule a time either daily or weekly where you input all your business information into this program. You can use it to write job estimates, prepare invoices, job costing, prepare payroll checks and make your payroll tax deposits. There are too many things you can use this program for based on your industry to write in this article.

Cash receipts and mileage expense are the two things that get left out of record keeping more than anything else. You come in from the field or go home at night and the first thing you do is clean out all the trash you accumulated in your pockets that day. Many of those trash items are cash receipts for small purchases or business lunches you had that day. Since they are cash receipts they are usually small amounts and people tend to think they are not worth fooling with. That line of thinking can break your company! Every penny you spend on your business is important. Quite often those expenses need to be passed on to your customers but poor record keeping keeps you from being reimbursed. When you throw away a reimbursable cash receipt it is equivalent to making a sale to a customer and then handing them cash back and saying “I am going to throw these two dollars away, would you like to have them?”

If you use your personal car in your business the Internal Revenue Service allows you to deduct 55 cents for every business mile you drive as an expense. You must keep a record of it though. If you are sitting in your living room and suddenly realize you need to buy new highlighters to take to the office the next day and go to the closest store and buy them, that is a business expense. If you decide to buy a bottle of shampoo while you are there, it is still a business expense, because you went there for the highlighters. You should keep something in your glove compartment at all times to write these little side trips on. You will need the date, the business purpose and the total mileage used. People ignore this because they think it is petty, but it does add up.

Let us assume you go to the store for these items about twice a week and the round trip is 10 miles each time.
Weekly you have 20 business miles that you have ignored, annually you have 1040 miles that you have ignored.

1040*.55=572

You have ignored to deduct a business expense of $572. That is not much money, so why should you care?

Now let us assume you are in the 25% tax bracket for Federal Individual Income Tax.

$572*.25=$143

You get to pay $143 more in taxes!

I used very small numbers to illustrate the importance of keeping good records, but the truth is you are probably paying much more than $143 in extra taxes each year due to poor record keeping.

Next week I will be writing step by step directions on setting up a sole proprietorship service company on Quickbooks. Regardless of how your company is formed or the type of company you have you should not miss it.