Keeping accurate records is an extremely important part of running a successful painting business. From the moment you start your painting business you should have a system in place to keep records of all transactions including income and expenses. This article will help you create that system and make sure it runs smoothly.
Receipts
Lets start with receipts. You’re going to want to make sure you can claim as many deductions as possible on your taxes. Every business expense needs to be accounted for. That means you’ll need to keep every receipt for every purchase you make for the business. Keep every receipt for paint supplies, office expenses, gas for your vehicle; everything.
Organizing Reciepts
Organization of your receipts is what’s really going to help you maintain your sanity when it comes to tracking your expenses. Here’s what I suggest:
Create a folder and put it in a file cabinet. This folder should have 12 sub folders in it. You’ll need one for every month. It helps to use 12 different tabbed manila folders for this. Write each month on each folder and place them in order in your filing cabinet. Every time you have a business expense receipt, make sure you record it in whatever accounting software you are currently using (ie. Quickbooks) and file it in the folder for the current month. Do this the same day the expense occurs so you don’t build up a huge pile of receipt. If you let that happen, procrastination will get the best of you and you’ll never want to file all those receipts away. I’m speaking from experience here; It works best when you file them right away.
When the calendar year is over you should have a nice stack of receipts in the folders. Go ahead and take all the folders out and store them in a safe place. Write the year on them so you know what year those receipts are for. You’ll need to store them for 7 years minimum in case of an audit. For the new year, go ahead and create the same 12 folders again and start the process over. This will ensure you always have records for every business expense you make.
Invoices
Do the same thing you did for receipts for invoices. After recording the invoice in your accounting software, file it away in a manila folder for that month. Use different monthly folders than the ones you used for your receipts. After the years ends, go ahead and store those along with the receipts and save them for 7 years also. Doing this will ensure you have accurate records in case of an audit. No one wants to get audited, but an organized business owner will be able to get through an audit a lot faster by using these simple tips.
Taxes
Tax time can be a real nightmare if you don’t have accurate records detailing what has happened with your business throughout the year. At any point throughout the year you should have a good idea how your business is doing and come tax time, you should be able to see exactly how you did the previous year. You should be able to print income and expense reports, profit and loss statements and many other useful reports that your accountant or tax preparer will need when filing your taxes. Accurate record keeping throughout the year will make this process much easier.
Stay Organized, Be Happy
Chances are you’re going to have a lot of painting customers throughout the year. That means you’ll have a lot of paperwork to file. This can be overwhelming but it really doesn’t have to be. If you file away your paperwork everyday you’ll avoid building that overwhelming stack that adds stress and needless pressure to your life. It’s nice to have a clean desk and organized business. It allows you to feel like your business isn’t running you but you are running it and have complete control. This also lets you focus on the more enjoyable aspects of being self employed like spending time with your family and enjoying vacations. A painting business can be a very lucrative and enjoyable business to run, but an unorganized one can create a lot of unnecessary stress on your life. Avoid that completely by following the tips above!
