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Bookkeeping requirements for business entities

Bookkeeping refers to the recording of the value of assets, liabilities, income, and expenses for your business. Simply put, it’s keeping track of what is bought, sold, owed, and owned; how much money comes in and goes out, and what profit is left over.

Accurate bookkeeping is essential in any business venture. Long gone are the days of shoe boxes stuffed with receipts. Organizing your inflows and outflows will not only help you determine which parts of your business are actually turning a profit, but can save you on professional fees you may pay to professional tax preparers, and make it easier to prove your expenses and income in the event of a tax audit.

Your small business bookkeeping needs may vary depending on the type of business entity you’ve chosen to organize your business under. The chart below shows basic needs for each of the most popular business structures:

If you’re using a small business accounting software package, you may want to consult your bookkeeper, accountant or tax preparer to make sure it can exchange files with the package he or she uses. Examples of popular small business accounting packages include Quicken, QuickBooks, MYOB and Peachtree.

If you’re using a spreadsheet, Microsoft Excel is the standard spreadsheet used by most businesses, but many other popular packages can read and write Excel-compatible files.

Entity Type: Balance Sheet Required? Possible Recordkeeping Software
Sole Proprietor No Spreadsheet
Single Person LLC No Spreadsheet
LLC Yes Small Business Package
Partnership Yes Small Business Package
“S” Corporation Yes Small Business Package
“C” Corporation

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