Financial Fortunes

Understanding finances and how to keep track of your finances can make or break your business.  Keeping track of your finances is especially important for small cash based businesses.  It is very easy to forget or lose track of what you make, the taxes you need to pay on your sales, and what was sold if you don’t develop a system to keep track of everything.  This can land you in hot water not only with the IRS and your state, it will also make it hard when you need investors or try to get a loan from a bank.

Many small businesses don’t realize the importance of keeping good records.  They want to try and hide some of their income in order to keep taxes down.  However, while this might save them a few dollars in the short term, this gamble could really hurt in the long run.  If the IRS finds out that you are not properly reporting all your income, including any cash tips or sales from other items that are not the main part of your business, they will not only collect the back taxes for that income, they will also impose fines and charge interest on the back taxes owed.

There are plenty of good accounting systems available that will help you keep track of your inventory, sales, invoices, expenses and income.  I frequently use Quickbooks.  Ask your accountant or other business owners for what they recommend.