Keep transactions identifiable
The IRS recommends keeping a business checking account separate from your personal account. Use the business account for business activity and clearly identify money moving between you and the business so your books tell a consistent story.
Label deposits by their source, including sales, owner funds, or loans. If a personal purchase reaches the business account, flag it rather than treating it as an ordinary business expense. Account separation alone does not establish deductibility.
Close the books regularly
Reconcile your bank statement with your bookkeeping records each month. Check missing fees, duplicate entries, outstanding payments, and deposits recorded differently. Investigate differences and keep a note explaining corrections instead of forcing balances to agree.
Store receipts and invoices with the matching entries. Organize records by year and type, and keep a readable backup. Electronic records must still support your return; choosing software does not replace the need for underlying documents.
A bank statement and your books show different balances. What should you do?
Prepare the year-end package
Ask your preparer for a document list and delivery date. A practical package can include reconciled reports, bank statements, income documents, payroll records if applicable, equipment details, mileage records, and estimated payment confirmations.
Add a short question list covering unusual transactions, missing documents, and changes in business activity. Send sensitive files through your preparer's secure method. For a Maryland business, confirm who handles state obligations and which records the preparer needs.
Action checklist
Choose the items you want, or print all.
Sources & further reading
- IRS Publication 583: accounts, reconciliation, and electronic records ↗
- IRS: why should I keep records? ↗
- IRS: recordkeeping ↗
General business education. Follow current agency instructions and review your circumstances with a qualified tax, legal or financial adviser.