Credit Cards and Transactions

Records to record Credit Card Transactions 
Credit cards also record income and payment. These are reflected in a credit card statement which is sent to you by your credit card supplier. Many people today use their credit card for business purposes so credit cards have become an important part of the recording system of a business. There is no problem having business as well as personal transactions going through your credit card. What is required at any particular time is for you to extract the items which are business related and the details of the transactions will form part of the business financial records.
The main thing to do with your credit card recording system is to retain all credit card statements as they are received so you can refer to them as required. When you receive your credit card statement it is a good idea to reconcile it with the various dockets received from the credit card transactions. Many people have found that their credit card contains transactions which have been incorrectly charged to them. You will not know whether all the charges recorded against your card belong to you or your business unless you perform a reconciliation when the statement is received at the end of each month.

Records to record your Business Sales
You need to keep all the documentation that records the sales transactions generated by your business because they will be required at a later time as a source for the entries that go into your sales journals. Sales in the average business may come through various channels and recorded in various formats such as through:
  • Cash register
  • Receipt book
  • Credit card
  • Invoices (copies that you hold)
  • Stock records showing the return of goods
  • Lists that you have where customers you have sold to are recorded

Records to record your Business Purchases
You have to keep records for all the purchases you make. Once again, these are needed as source documents from which entries can be made into your purchases journal and eventually to the ledger accounts of your business. The purchases come through either your petty cash system (where small cash purchases are recorded) or through the receipts you receive when you make a payment through the cash register or other methods such as cheques. It can also come through your credit card statements or the purchase invoices that you receive from your suppliers.

Records to record your Business Expenses
It is critical to keep good records of the expenses of the business. If you have spent money in any area of the business then it is likely the cost will be tax deductible. You will not be able to fully claim the expense if the records do not confirm the transaction. You may make a claim in the normal way, but if the IRS wants to carry out an audit or an investigation into your tax affairs they will not allow claims where you do not have the substantiating records to support the claim that has been made. Expenses can be recorded through your check book, credit cards, invoices you have received or through petty cash expenses or other means such as diaries and log books etc.

Records to record your Staff’s Wages and Salaries
These records will contain details of your staff as well as amounts paid to them periodically plus information on any fringe benefit tax and superannuation (if applicable). Wages are a major expense for any business so wage records are a critical part of your system and need to be put in place early, as soon as you take on employees. There are many good software packages available now that will handle the staff and wages side of your business.

Records to record your Assets
During your business year you will be buying and selling assets and these transactions need to be recorded correctly. This is especially important if the assets are of considerable value because they have to be written out of your books with the correct figures and depreciation recovered etc in many cases. Your records should show the actual assets bought and sold and the date they were bought including the cost of purchase. If they have been sold show the amount received for their sale. If you are leasing any assets maintain details of the lease agreement and record all information relating to the lease payments.