Monday, August 22, 2011

Paying Cash for Business Expenses

This is not necessarily a good idea, unless you have a Petty Cash account set up.  

As a small business owner, if you withdraw cash from your bank through the ATM, or inside the bank with a check and then pay for business expenses with the cash it may be impossible to prove that the money you withdrew was not a draw.  

I definitely have to advise against paying for anything major with cash.  Paying for improvements, equipment, rent, etc with cash is a good way for the person you paid to either come back and say that you didn't pay them (since there is no paper trail), or for you to claim it on your taxes as a business expense (since you most likely do not have a W-9 from them and cannot file a 1099).

Just a few things to think about before paying for your purchase with cash.

You can check out my website for more information or to contact me for additional topics.

www.kdhbookkeeping.com


Thursday, August 11, 2011

How long should I keep my records?

This is a question each business owner eventually asks themselves.  Usually when their storage area is overflowing and they are not sure what they can shred and what they have to keep.

I've put together this list of the most common records and when/if they can be destroyed.

If you have questions or require additional information please feel free to contact me at info@kdhbookkeeping.com

 
Document
How long to Keep

Accounts Payable ledgers and schedules
7 years

Accounts Receivable ledgers and schedules
7 years

Articles of Incorporation
Permanently

Audit Reports
Permanently

Bank Deposit Slips
3 years

Bank Reconciliations
1 year

Bank Statements
Permanently

Bills from Vendors
8 years

Bills of Lading
6 years

Brokerage Statements (Annual)
Permanently

Budgets
2 years

Cancelled Checks
Permanently

Cancelled Checks for important payments (taxes, purchase of property, special contracts)
Permanently

Capital Stock and Bond Records
Permanently

Cash Books
Permanently

Cash Projections
2 years

Contracts, mortgages, notes and leases (expired)
7 years

Copyright Registration
Permanently

Correspondence (General)
3 years

Correspondence (Legal and important matters)
Permanently

Correspondence with customers or vendors
1 year

Credit Memos
3 years

Deeds, Mortgages and bills of Sale
Permanently

Depreciation Schedules
Permanently

Duplicate Deposit Slips
2 years

Employee Expense Reports
3 years

Employee Payroll Records (w-2, w-4, etc)
6 years

Employee Personnel Records (After termination)
6 years

Employment Applications
3 years

End of the Year Trial Balance
Permanently

Expense Analysis and expense distribution schedules
7 years

Expired Insurance Policies
6 years

Financial statements (end of year)
Permanently

Freight Bills
4 years

Garnishments
7 years

Insurance Records
Permanently

Internal Audit Reports
3 years

Internal Reports
3 years

Internal Work Orders
3 years

Inventory Records
7 years

Invoices to Customers
8 years

Journals
Permanently

Minutes of Board of Directors Meetings
Permanently

Notes Receivables
7 years

Option Records (expired)
7 years

Patents and Related Papers
Permanently

Payroll Records
8 years

Petty Cash Vouchers
3 years

Physical Inventory Tags
3 years

Productions and sales reports
7 years

Property appraisals by outside appraisers
Permanently

Property Records (depreciation schedules, blueprints and plans)
Permanently

Purchase Journals
Permanently

Purchase Orders (all others)
1 year

Purchase Orders (purchasing dept copy)
7 years

Receiving Sheets
1 year

Requisitions
1 year

Retirement and Pension Records
Permanently

Sales Commission Reports
3 years

Sales Records
7 years

Scrap and Salvage Records
7 years

Subsidiary Ledgers
7 years

Tax Returns and worksheets
Permanently

Telephone logs/message books
7 years

Timecards
7 years

Trade mark Registrations
Permanently

Training Manuals
Permanently

Voucher for payments to vendors, employees, etc
7 years

Voucher Register and Schedules
7 years

Withholding Tax Statements
7 years