More often than not self-employed persons/small business owners do not keep records of their expense. Your expenses are what is going to prove the net profit you report when you are filing your taxes. Some expenses such as petrol and phone card for prepaid customers are overlooked, which can accumulate into a tidy sum at the end of the year. It is not enough to say I spend around $100,000.00 for the year in petrol; you also need the proof.
Another common over sight is when contracted workers are given cash it is not recorded. For example a plumber repairs a pipe on the premises and charges $3,500.00. he is paid but there is no receipt of the payment.
Well in this blog I will provide you with tips on how to ensure that you keep proper records.
- Ensure that all small receipts are stapled/glued to a letter size paper. This makes them easier to keep track of and easier to file.
- Batch receipts by the month. Example all receipt for February should be filed together.
- Ensure that you collect receipts when you purchase petrol. For persons who finds this a challenge you may sign up and get an advance card from Manufacturers Credit & Information Services Limited. This is basically a card that you put cash on and purchase petrol off. At the end of the month you are sent a statement with your petrol expenditure for the month.
- Ensure that whenever you use your personal funds to do stuff for the business you write it down. Include date, the entity you did the business with and the amount; also include the receipt/s if possible.
- Avoid using the business bank account/debit/credit card to do transactions.
- Whenever a withdrawal is done make a note on the back of the withdrawal slip what the money was used for and if possible attached the receipt/s. This will help when your accountant is trying to reconcile your books.
- Ensure you have a receipt book to record transaction that may occur with persons who do not provide receipts. For example you go to coronation market to buy produce for your restaurant.
- Have a basic computerize accounting system. This is one of the more popular one https://www.waveapps.com/. Best of all it is free.
- If you use the toll often for your business it is easier to get a tag. As the receipts are small and will tend to get lost. Plus the chances of forgetting to record a toll transaction is less likely.
Feel free to contact me for help or further information email@example.com