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Small business accounting includes a variety of paperwork used to create the company’s financial statements. Purchase orders, invoice source documents, and receipts form the backbone of the accounting books, containing all relevant details regarding each transaction. Here’s a rundown of these various business source documents and how they are used.Invoice source documents in accountingBefore recording a business transaction in your business’s accounting books, you must be sure that you’re reporting the correct transaction date, payer, payee, and amounts. Source documents are the physical proof of this information, providing a reference point for the bookkeeping process. They can also be used as evidence for an audit or for tax preparation. While these records may be physically filed away as paperwork, in many cases they will be electronic with a timestamp and date for reference. Both parties involved in any transaction should receive a copy of the relevant document for their own records. These will provide evidence of the transaction’s:
This is all the information needed to create an accurate accounting entry. Types of business source documentsIn addition to a source documents invoice, there are many other forms that this evidence might take. Here are a few common examples.
How to file and track business source documentsThe examples above are some of the main source documents you’re likely to encounter during daily business operations, but any evidence relevant to your accounting ledgers will qualify. Once you’ve submitted or received a source document invoice or receipt, what should you do with it? It’s important to devise an organized filing system to ensure your supporting paperwork is available for reference. There are numerous controls to help make the system more efficient.
How long should you hold onto source documents?While regulations will vary, it’s recommended to retain your source documents for five to seven years for tax purposes.The IRS states that small businesses must hold onto any records that support deductions, income, and credits until the period of limitations for that tax return has expired. This can be anywhere from three to seven years, depending on your tax situation. Once the period of limitations has ended and you no longer need your source documents, you should dispose of them securely. Shred all physical paperwork and ensure your cloud storage is empty, making room for more recent documents. What are business accounting documents?What is accounting documents? Accounting documents and document records regroup every document that plays a role in the preparation of financial statements for a company, like income statements and balance sheets. They include records of monetary transactions, assets and liabilities, ledgers, journals, etc.
What are three types of business documents?21 types of business documents. Contracts. ... . Documentation of bylaws. ... . Non-disclosure agreement. ... . Employment agreement. ... . Business plan. ... . Financial documents. ... . Transactional documents. ... . Compliance and regulatory documents.. What are 5 typical business documents?These are:. Financial Records. Invoices and receipts for the goods and services being sold. ... . Protecting Legal Records. Leases. ... . Employee Records. All financial records such as bank accounts, tax file numbers and their superannuation details. ... . Policies & Procedures. ... . Other Business Records.. What are 5 types of documents?Types Of Documents Your Business Needs To Know About. Plans. Business plans cover all the aspects of your business and every nook and cranny of that aspect. ... . Proposals. ... . Reports. ... . Contracts and Agreements. ... . Policies. ... . Letters. ... . HR Documents. ... . Research Papers.. |