Are Electronic Records Sufficient for Your Financial Tracking?

Most business use digital systems for tracking financial records and other information, and there are a lot of benefits to using these online accounting systems. Does your company utilize a digital software to manage financial details? Even though the transactions are recorded in the system, it is still essential that you have receipts and other records to back up the transactions.

New Call-to-action

Why are Receipts and Records Needed?

The reason that you need to keep the receipts and records is to provide verification in case your company is audited by the IRS. If an audit occurs, then they will need more information than just the basic transactions in your accounting system. These receipts and financial documents back up the records, showing that the transactions were real and legitimate.

There are cases where the backup documentation wasn’t available, causing the company to get in trouble with the IRS. Additionally, this information allows your company to verify the transactions in the system in order to ensure that the records are maintained correctly.

Paper Records to Back Up Your Electronic Journal

When the IRS looks at your digital system, it is assumed that you have paper documentation to back up the information in the software programming. Digital transactions can be changed, but a paper record provides the verification that is needed to increase the reliability of your tracking system.

In fact, the tax court has said that it is negligent to rely on electronic entries without maintaining supporting record to validate the transactions.

Staying Consistent with Documentation

The best thing that you can do to keep your company protected is to maintain consistent documentation at all times. Many business owners don’t have the time or knowledge to maintain accurate record keeping, which is why it is beneficial to work with a professional company that offers the bookkeeping services that you need. Having a bookkeeper on your team will ensure that you are keeping track of the right information throughout the year, and you can have the peace of mind to know that a professional is staying ahead of the changes in tax law.

Here at Easier Accounting, we want to make it easy for you to manage the accounting for your business. For more information about working with a small business bookkeeper, we encourage you to contact us right away. We are always here to answer your questions so that you will have success with your accounting and bookkeeping efforts. Call us today: (888) 620-0770