Accounting is the process of keeping track of funds flowing in and out of a business and then compiling this information for internal financial reports and mandatory tax forms. Accounting for a small retail store is relatively simple, because customers tend to pay for all purchases right away, eliminating the need for a billing or accounts receivable system, which keeps track of how much customers owe on credit. However, small retail stores do need to keep track of accounts payable, or sums that are owed to vendors, employees and tax agencies.
Cash Register Receipts
Cash register receipts are the main sales records kept by small retail stores. These receipts document incoming revenue, which is the starting point for calculating profit and loss. In addition to providing a record of each individual sale, cash register receipts calculate sales totals, dividing transactions by category, such as clothing or food, and tallying the amounts that the store has taken in through different forms of payment such as cash, check and credit cards. Cash register receipts also add up the amounts of sales tax that your retail store has collected from customers.
Purchase receipts are sales slips and invoices that your retail store receives from vendors who supply your inventory and companies that provide for your infrastructure needs such as equipment, shelving and cash register tape. In addition to tracking expenditures for the sake of offsetting sales revenue and calculating gross profit, purchase receipts provide you with information necessary to pay your bills if a vendor uses a billing system that allows you to pay over time.
Payroll records provide information about how much you have paid your employees and how much you have withheld for payroll and income taxes. These figures document one of your store's fundamental expenses, which makes up an essential part of your profit and loss equation. Payroll records also tell you what you need to know to file and pay a variety of periodic payroll tax forms required by the Internal Revenue Service as well as state unemployment insurance and industrial insurance agencies.
Bank Account Statements
Bank account statements provide information about how your business transactions interface with your cash flow. If your retail store is a sole proprietorship, then you are not required to maintain a separate bank account that keeps your company funds distinct from your personal assets. If your business is structured as a corporation or limited liability company, however, you must have a business account that documents the flow of funds more diligently in order to be accountable to stakeholders. Regardless of whether or not your business has its own bank account, your bank account statements are important tools for keeping track of funds flowing in and out of your business.
Devra Gartenstein is an omnivore who has published several vegan cookbooks. She has owned and run small food businesses for 30 years.