Accounting records should explain the company's transactions and financial position. Keeping only the year end bank balance is not enough to understand sales, liabilities, unpaid invoices or amounts retained by processors.
Capture the full transaction Retain invoices, contracts, receipts and payment references. Separate company expenditure from personal spending. Record founder contributions and withdrawals according to their actual nature rather than leaving them as unexplained transfers.
Reconcile every source of money Include bank accounts, payment providers, currency balances and relevant cash records. A processor payout is normally a net movement containing several components. Preserve the detail needed to reconcile gross sales, fees, refunds and reserves.
Build a monthly close routine Review unpaid receivables and suppliers, inventory where relevant and unusual entries. Resolve missing documents while the people involved can still explain the transaction. Waiting until the annual audit makes ordinary questions harder to answer.
Prepare for reporting Discuss the accounting framework, financial statement requirements and audit position with the accountant. Simplified reporting eligibility and audit exemption are different questions.
For a company selling in several currencies, retain original amounts and conversion evidence. The accounting records should make differences explainable rather than force every settlement to equal the sales report.
Assign responsibility for document capture and review. The accountant can prepare reports from reliable records, but cannot reconstruct a complete business history from an unlabelled folder of bank screenshots alone.
Sources and scope
General information, not advice for your individual legal or tax position. Confirm current requirements with the relevant authority or provider.