We have been noticing an alarming trend regarding our clients record keeping practices. They are more often than not insufficient thus making our job of defending you much more difficult.
What constitutes the business records needed in case of an audit?
The most obvious ones are bank statements, payroll journals and tax filings. But you will also need:
– Employee personal file (which should include W-4, copy of Social Security Card & secondary form of identification.)
– Employee time & Attendance record
– Customer Sales Invoices
– Vendor Invoices
– Credit card statements (Credit card statements are not by themselves records and you must keep the related reciepts)
– Appointment Calendar
– Your records must be saved in an organized fashion and easily accessible.
– Electronic copies of these records are considered valid
– Make certain that your computer system is backed up daily.
If you, like the many other small businesses, are using an online accounting and or payroll program be aware that your data may not be accessible once you leave the service.
In addition to assisting us in an audit, good record keeping practices will help you if and when you have a billing dispute, labor or legal issue, or looking to value or sell your business.