As a self-employed individual, maintaining good books and records is one of the most essential tasks to achieve long term success. The process of maintaining books and records is an ongoing process. Your records should be complete and reflect all your self-employed or business activities, regardless of how frequently the activities occur.
Maintain a daily log
It’s a good idea to keep daily records of all your business transactions. We provide a sample log at the end of this module to help you, but you can also search online or buy a software program to keep track of your business transactions.
Be sure to:
- list detailed information about each transaction; and
- update your records every time you:
- make a sale or get paid,
- make a purchase, or
- pay an expense.
To support your accounting, it’s important that you document (log) your activity as soon as it occurs. Save all records of your transactions for a minimum of three years from the date you file your tax return.
Your records should contain enough information to correctly determine:
- income earned—the amount you received as payment, regardless of how you were paid (whether by cash, check, money order, credit card, or any other method); and
- expenses paid each time you did anything related to your self-employed or business activity.