Why You Need to Keep Good Records


How profitable is your business? You'll never know if you're not keeping trackwhich is reason enough to set up some sort of recordkeeping system.

Keeping records can be both a defensive and an offensive activity. It's defensive in that you have key information about your business in case you ever need it in the futureto answer a query from the IRS, for example, or to investigate a customer complaint or notify customers in the case of a product recall. It's offensive (in a good way) in that you can use this information to generate more sales, by selling additional items to your existing customer base.

And then there's that matter of tracking the progress of your business.

You need to know how much things cost and how much you sell them for in order to gauge the success of your business. If nothing else, you have to report your business income to the Internal Revenue Service at the end of each year, and you can't do that if you don't know what you've sold and for how much. The more detailed and accurate your recordkeeping, the easier it is to put together your yearly tax returnsand to claim all the allowable deductions against your income.

In addition, setting up a simple accounting system lets you generate monthly financials, which tell you on a near-real-time basis just how well your business is (or isn't) doing. After all, you don't want to wait until the end of the year to find out that you're going brokeor getting rich!




Making a Living from Your eBay Business
Making a Living from Your eBay Business (2nd Edition)
ISBN: 0789736462
EAN: 2147483647
Year: 2004
Pages: 208

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