What are the essential financial records I need to keep for my business?

August 15, 2024

Maintaining accurate and organized financial records is crucial for the success and sustainability of your business. The key financial records you should keep include:

Income Statement (Profit and Loss Statement): Tracks your revenues, costs, and expenses over a specific period, showcasing whether your business is profitable.

Balance Sheet: Provides a snapshot of your business’s financial health by detailing assets, liabilities, and equity at a given point in time.

Cash Flow Statement: Shows the “inflows” and “outflows” of cash within your business, helping you monitor liquidity and manage cash flow effectively.

General Ledger: This is the master record that contains all your financial transactions. The general ledger should track all of your business accounts, including assets, liabilities, equity, revenues, and expenses. It acts as the basis for creating other financial reports.

Accounts Receivable and Payable Records: Tracks the money owed to you by customers (receivables) and the money you owe to suppliers (payables).

Expense Records: Detailed documentation of all business expenses, including receipts, invoices, and bills.

Payroll Records: Includes information on employee wages, salaries, benefits, and tax withholdings, which is essential for tax filings and compliance.

Tax Filings and Records: Keep copies of all tax returns, payment receipts, and related documents to ensure compliance and simplify audits.

Loan and Debt Records: Documents related to any loans, including agreements, repayment schedules, and interest payments.

Keeping these records up-to-date and organized will not only help you make informed financial decisions but also ensure you’re prepared for tax season.

Explore Questions

How do I legally protect my business idea?

When does the IRS consider my hobby a business for tax purposes?

How do I build a sales funnel?

Do I need a Registered Agent?

What are the essential financial records I need to keep for my business?

I'm just starting out, how do I build a customer base?

I have an LLC. How do I file my taxes with the IRS each year?

What is the Beneficial Ownership Report and does my business have to do it?

I need to hire my first employee. What do I do?

How do I know if I should do my own accounting or hire an accountant to do it for my business?

In what business situations should I consult an attorney?

What types of business insurance do I need for my business?

What is included in Washington State Excise Tax?

How can I find out if a physical location I am interested in has the right zoning for my type of business?

Can an LLC have investors or shareholders?

Do I need a resellers permit?

How can I ensure that an independent contract I have hired won't be classified as an employee of my business?

How do I understand permitting requirements if I am opening a physical store location?

How much should I charge for my products and/or services?

When should I update my business plan?

How do I know if I need a food cottage permit or if I have to prepare food I am selling for my business in a certified commercial kitchen?

Should I elect to have my LLC taxed as an S Corp?