Monitor the progress of your business

You need good records to monitor the progress of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success. 

Prepare your financial statements

You need good records to prepare accurate financial statements. These include income (profit and loss) statements, cash flows, sales forecasts and balance sheets. These statements can help you in dealing with your bank or pay who you owe you money and help you manage your business. The following documents attached are intended as a guide only. 

• An income statement shows the income and expenses of the business for a given period of time.  Click here for an Income Statement sample template.
• A balance sheet shows the assets, liabilities, and your equity in the business on a given date. Limited Liability Companies are expected to complete a balance sheet as part of their annual. Click here for a Balance Sheet Sample template.
• A cash-flow statement is a financial statement that summarizes the amount of cash entering and leaving a business. Click here for a cash-flow Excel sample template.
• A sales-forecast outlines expected sales revenue.  It estimates how much your business plans to sell within a certain time period either monthly, quarterly or annually.  Click here for a Sales Forecast Excel sample template.

Keep track of your deductible expenses

Unless you record them when they occur, you may forget expenses when you prepare your tax return.

Prepare your tax return

You need good records to prepare your tax returns. These records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your business and prepare your financial statement. 

Support items reported on your tax returns

You must keep your business records available at all times for inspection by MFEM when required. If the MFEM examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination. 

Every person(s) carrying on a business or deriving an income (other than salary and wages) shall keep sufficient records to enable that person’s accessible income and allowable deductions to be readily determined by the Revenue Management Division. Refer to: Income Tax Act 1997.

These records must be held for at least five years, even if you stop operating. You don’t need to send your records or working papers with your tax return, but you must keep them in case Revenue Management wants to see them.