| > | | | | the cost of which is lost when the grocery receipt is |
| Financial record keeping and bookkeeping by small | | | | discarded. If close attention is paid then the stationery |
| business is occasionally accurate but often produced | | | | item could have been obtained on a separate receipt |
| once a year for tax purposes. By maintaining a diary, | | | | and the cost of the journey to purchase it also |
| retaining all receipts and updating the accounting | | | | included in the business expenses. |
| records on a regular weekly or monthly basis small | | | | The stationery item is just one example which could |
| business can seriously account for all costs and | | | | be multiplied hundreds of times with hundreds of |
| reduce the final tax bill. | | | | different items during the financial year. While each |
| Tax authorities are often relaxed about the need for | | | | item missed and unrecorded may not be significant the |
| small business to prepare and produce formal | | | | total could well be sufficient to significantly reduce the |
| accounting records. Often the requirement is simply | | | | year end tax burden by lowering the net taxable |
| that each business retains sufficient financial records to | | | | accounting profit. |
| support the accounts submitted. | | | | Having retained a separate receipt for everything it is |
| Such advice from tax authorities places a burden upon | | | | useful if the receipts are filed and the bookkeeping |
| small business in that the vast majority are honest | | | | system employed updated at least once a month and |
| hard working people who are meticulous about | | | | preferably each week. By updating the accounting |
| keeping accounting records of sales made during the | | | | records on a regular basis more expenses will be |
| financial year. Unfortunately many small businesses are | | | | recorded as the memory will remember recent |
| not so meticulous about keeping financial records of | | | | expenses more clearly and accurately. |
| business expenses in their accounts. | | | | Another useful method to ensure all business |
| A typical taxi driver may for instance keep a diary and | | | | expenses are maximised is to keep a daily diary of all |
| record the daily receipts from his fares. If those | | | | expenses incurred. Use the entries in the diary when |
| recorded receipts are accurate then the total sales | | | | updating the bookkeeping records to ensure nothing |
| turnover for the year will show the correct total. The | | | | has been missed in the accounts. |
| same may not be true of expenses and the accounts | | | | The essential message is to be meticulous about |
| thereby overstated. | | | | keeping receipts for everything, no matter how small, |
| The total business expenses of the taxi driver would | | | | and recording both income and expenditure on a |
| mainly include the fuel receipts plus the other running | | | | regular basis so that items are not lost or forgotten |
| costs of the business. Typically a receipt for fuel will | | | | and included in the bookkeeping records. By also |
| be obtained and kept in a file or shoe box. Some may | | | | keeping a diary of financial records even if a receipt |
| get mislaid and lost and be missing from the final | | | | has been mislaid the amount should still be included in |
| accounts preparation. | | | | the accounts. It could be disallowed later if the tax |
| Other receipts for miscellaneous items may not even | | | | records are enquired into but that is a matter of |
| be retained as forgotten, lost or not thought of at the | | | | negotiation with the tax authority from a standpoint |
| time of purchase. Examples may be purchase of the | | | | where the financial records are correct. |
| diary in which sales records are kept, business cards, | | | | In addition all small business should take some time to |
| other stationery, and cash payments for a whole | | | | review all potential expenditure which can be claimed |
| variety of miscellaneous items. | | | | under the tax rules. Many valid expense items can be |
| The same practise is also often applicable to not just | | | | missed having been dismissed as ordinary expenses |
| taxi drivers but many small businesses. A small | | | | which may be business related and therefore |
| business owner may visit a supermarket for groceries | | | | claimable in the financial accounts. |
| and also buy an item of stationery for business use | | | | |