The Importance of Good Records

"Our age of anxiety is the result of trying
to do today's jobs with yesterday's tools."

~Marshall McLuhan~

My friends at Business Owners Toolkit posted this article recently and I love what it says! Good record keeping is vital to the health of your small business and outsourcing your bookkeeping to a competant service like I.B.S. is a great way to accomplish this!

Unless your business is accounting or bookkeeping, keeping financial records is probably not what you do best. Most likely, you'd rather spend your time selling your product or service. However, if you are going to run a successful business, accurate and timely financial information is a must. Here are some of the reasons why you need a good financial recordkeeping system:

Monitoring the success or failure of your business.

It's hard to know how your business is doing without a clear financial picture. Am I making money? Are sales increasing? Are expenditures increasing faster than sales? Which expenses are too high based on my level of sales? Do some expenditures appear to be "out of control?"

Providing the information you need to make decisions.

Evaluating the financial consequences should be a part of every business decision you make. Without accurate records and financial information, it may be hard for you to know the financial impact of a given course of action. Will it pay to hire another salesperson? How much will another production employee cost? Is this particular product line profitable?

Obtaining bank financing.

A banker will usually want to see financial statements: a balance sheet, income statement, and cash flow budget for the most current and prior years, as well as your projected statements showing the impact of the requested loan. A banker may even want to see some of your bookkeeping procedures and documents to verify whether you run your business in a sound, professional manner.

Obtaining other sources of capital.

If your business has reached the point where you need to take in a partner, any prospective partner will want to become intimately familiar with your financial picture. If you need capital and are thinking of taking in an outside investor, you will need to produce a lot of financial information. Even your suppliers and other creditors may ask to see certain financial records. Such information may be produced by your outside accountant, but it is based on your day-to-day recordkeeping.

Budgeting.

All businesses should use a budget for planning purposes. A budget will help keep your business on track by forecasting your cash needs and helping you control expenditures. In addition, if you are seeking bank financing or other sources of capital, a banker or prospective investor will probably want to see your budget as evidence that your business is well planned and stable. You must have solid financial information to prepare a meaningful budget.

Preparing your income tax return.

Whether your business is a sole proprietorship, partnership, or corporation, you must file an income tax return and pay income taxes. With good records, preparing an accurate tax return will be easier and you're more likely to be able to do it on time. Poor records may result in your underpaying or overpaying your taxes and/or filing late (and paying penalties). If your accountant prepares your income tax return, poor records will almost certainly result in your paying higher accounting fees. If your business is a partnership, not only will you have to prepare a partnership tax return, but partnership return amounts will pass directly to the tax return of each partner. So your recordkeeping will directly affect the tax return of each partner.

Complying with federal and state payroll tax rules.

If you have employees, you are aware of the myriad of rules and regulations relating to payroll taxes. Payroll tax deposits must be made according to strict deadlines. Late payment of payroll taxes results in severe and unnecessary penalties. Also, you must file a payroll tax return every quarter, which you must reconcile with the payroll deposits made during the quarter. Then at the end of the year, you are required to give your employees and the government W-2 forms, which must agree with your quarterly payroll returns. Sound bookkeeping practices will make compliance with all these payroll rules easy. Poor records will make it impossible.

Submitting sales taxes.

If you collect sales tax from your customers, good records will make it easy for you to compute the tax due and prepare the required reports.

Distributing profits.

If your business is a partnership, you will need good records to determine the correct amount of profits to distribute to each partner. If you are operating as a corporation, you must determine the company profits that you will be paying out as dividends to the shareholders.

I.B.S. offers educated experience with over 10 years in the bookkeeping field. Please explore our web site and learn more about how we can help you! If you don't find the answers you're looking for, please call, fax or e-mail your questions to our office.

We all know that the church is under attack in America. The article below is one I read this morning from Christian Law Association (CLA) regarding new taxes that state governments are trying to impose on churches and other non-profits. Fortunately it's not too late to try and do something about it. Read on to find out how you can help....


There is no question America’s churches receive less favorable treatment from government and from society than they did forty or fifty years ago. Churches are less respected and less influential in today’s culture than our Founding Fathers intended them to be. With less respect comes less appreciation for what churches contribute to society.

For example, budget gaps are pushing local governments to develop an array of new fees—some of which are being applied to nonprofits, including churches.

Nonprofits and churches are becoming an untapped source of new revenue. Previously, churches were not taxed because the government believed they provided a valuable resource for society. The church civilized its members and made them good citizens. The church cared for the poor and distressed. Government wanted to make sure churches had as much revenue as possible to carry out these important non-governmental functions.

This view is changing. Government now sees churches, not as cultural partners and service providers, but as sources of additional revenue. Today the government has attempted to take over many of the charitable and civilizing functions of churches.

Some in the federal government have suggested donations to churches and nonprofit groups should no longer be tax exempt. Fortunately, that step has not yet been taken. But other steps are being taken, primarily at the local level. We must be on alert.

Click Here to Read Examples of Government “Taxing” Churches

The Christian Law Association continues on the front lines of this and other battles. Strong local churches not under the control or taxation of the government are necessary for our nation to return to its heritage and once again honor God in our land. At CLA, we are honored to stand with and serve the Bible-believing local churches of our land. We encourage you to stand with us.

Click Here to Find Out What Churches Can Do

Click Here to Read the Full Article Online