As a Michigan business owner, you probably know that there is a lot of paperwork involved in keeping your business running. It does not matter how small or large your company is, good record keeping is essential. If you fail to keep good records, it will catch up with you. Most likely, you will end up in trouble when tax season rolls around. However, being able to properly file your taxes is only the tip of the iceberg when it comes to the benefits of good record keeping.
The IRS explains that keeping good records lets you stay on top of money owed to your business and money your business owes to others. It enables you to keep your credit solid while also ensuring you collect on debts owed. Good records also let you gauge how well your business is doing. You should be able to check your records at any point and see if you are doing great or if your business is in the red. This allows you to react accordingly.
Good recordkeeping skills also will help you to figure out deductions and prepare tax documents properly. You need all these records to make sure what you claim on your taxes is correct. It will not only help with your business taxes but also your personal taxes as you will be able to identify the personal income from the business income.
You can track assets better, too. You will know appreciation and depreciation, which you may need to know when selling, buying or doing your taxes. Plus, it can help you to know when to reaplce equipment.
As you can see, keeping good records allows you to properly maintain the financial side of your business. This information is for education. It is not legal advice.