Written by Marc R Barnes EA
January 09, 2010
A business owner who keeps accurate records (aka bookkeeping or books) is able to easily monitor the progress of his or her business. Accurate bookkeeping can show whether the business is improving, what items are selling, or what changes may be necessary to make it more profitable. Maintaining accurate books can increase any business owner's chances of success.

Accurate books are needed to prepare your financial statements. Income statements and balance sheets are used to prepare your income tax returns. Saving your receipts makes it easy to keep track of which expenses are business-related and which ones are not. Keeping accurate books also helps you to distinguish between taxable and nontaxable income.

Keeping track of expenses lessens the chance that you’ll forget which expenses need to be deducted when it comes time to prepare your income tax return. Any record that supports the information reported on your income tax return is a record worth saving. If the IRS audits your income tax return, having a complete set of books for the year in question will speed up the examination process.