Here are four more things you can do to make your business record management easy.
4. Have and use a separate credit card for business expenses.
Using your personal credit cards for business purposes will swiftly drop you into a record management quagmire. A business credit card greatly simplifies your business record management by helping keep your personal and business expenses separate. (It also helps make your business look more professional.)
5. Keep a mileage log of your business travel.
If you use any of your vehicles for business purposes, a mileage log will be a big help in record management. Note the mileage (or kilometer) reading on the odometer at the beginning of the year and then enter the mileage by date each time you use the vehicle for a business purpose. Keeping your mileage log in the glove box of your vehicle will make this easy. If you have more than one vehicle that you use for business purposes, keep a mileage log in each.
6. Keep all your business records for a particular tax year together and in one place.
Having your business records scattered all over the place is a real time-waster when it comes to accounting or preparing your taxes, and organizing your business record management system by fiscal year will make it much easier to find the business records you need when you need them.
Need some help setting up a filing system? See The Easiest Filing System and/or Mastering Your Filing System for tips.
7. Keep your business records for the correct length of time.
For some reason, there seems to be a lot of confusion about how long you have to keep your business records. For tax purposes, "if you file your return on time, keep your records for a minimum of six years after the end of the taxation year to which they relate" (CRA).
This six-year period of time starts from the last time you used the business records, not from the time the transaction occurred.
The CRA also has rules about the destruction of business records; see How Long Do I Have To Keep My Business Records for details.
These seven things you can do to make your record management easy aren’t difficult. Like a lot of the administrative business related to running a business, they just require establishing good habits and persistence. But if you apply these rules of good record management now and follow through, you’ll see a huge difference next tax time and your accounting will be easier all year long.
