The tax law requires all businesses to maintain an accurate and complete set of business records that clearly reflects business income and business expenses only.
Too often though, business owners commingle their business and personal accounts. And this can lead to all sorts of problems, including tax, non-tax, and legal problems down the road.
Business owners must keep separate business income and expenses from their personal income and expenses, and here's why:
1-To file accurate and complete tax returns that clearly reflects business income and expenses only.
2-To minimize a potential tax audit and unfavorable outcome.
3-To avoid potential legal issues with customers, vendors, creditors and other related parties.
4-To avoid having the business involuntarily dissolved and or challenged in a court of law.
5-The tax law requires it.
6-To prepare proper financial statements (and obtain clean audits and reviews is applicable).
7-To present to prospective buyers accurate and complete financial statements and tax returns.
8-To present to possible creditors to obtain financing.
9-To avoid potential legal issues between the business owners themselves.
Thus, all businesses must give careful consideration to proper record-keeping day from day one to ensure they meet their obligations to society as a whole.
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net