Keeping records so filing is a review, not a reconstruction

The difference between the two

A business that is tax-ready hands over a closed set of books and answers questions. A business that is not spends the season rebuilding a year from bank statements, chasing documents from people who have moved on, and making decisions under a deadline that should have been made calmly months earlier.

The gap between them is not effort in the season. It is a small number of habits kept through the year.

The habits that do the work

• Separate accounts Business money in business accounts and nothing else, which is the single change that makes every other habit easier to keep.
• Capture at the point of spend The document attached to the transaction when it happens, not collected later. A receipt photographed at the till costs seconds; the same receipt reconstructed in March may not exist.
• Close every month Twelve small exercises rather than one large one, and each month is checked while the people involved still remember it.
• Collect payee details before paying Contractor information gathered before the first payment, not after the work has finished and they have stopped replying.
• Keep the asset history What was bought, when it was placed in service, and what was spent on it since. These determine the position on disposal, which may be years away.
• Tell your adviser about changes A new state, a first employee, a new entity or an equity grant each create obligations with their own timing, and hearing about them at the year end turns advice into repair.

What to have ready when the season starts

• A closed set of books for the year, reconciled, with the supporting schedules
• Bank, card and loan statements for every month, including any account closed during the year
• Payroll reports agreed to the ledger
• A list of assets bought and sold, with the documents
• Every document reporting income to you from a third party
• A short note of anything unusual that happened during the year