Proper record keeping important for small business tax time and in case of audits

Tax time can be stressful for those with day trading companies, and even more so if record-keeping isn't a strong suit. In order to properly file, and especially in the case of an Internal Revenue Service audit, creating, organizing and holding onto the right documents and financial data is key.

Should a business owner be faced with an audit - which is uncommon for the smallest of businesses, although certain triggers may bring more scrutiny from the IRS - a penalty may be assessed for neglecting to keep records. This doesn't mean comprehensive bookkeeping, but the failure to produce evidence of income and expenses can certainly result in a fine.

One of the most important steps, and one often overlooked, is keeping business and personal expenses separate. Even for day traders without a formal home office or equipment solely for business use, any deductions against items or services that could be considered personal as well should be documented. Simply marking the division between office and home use on an internet utility bill is an acceptable means of documentation.

No matter what means of record keeping are utilized, it's best to keep files organized. This will make tax time easier, and in the event of an audit, will speed up the process. Many IRS auditors are accountants, and will appreciate a well-maintained set of records rather than an out-of-order pile of dog-eared receipts.

As bill payment and money transferal become increasingly automated, losing track of copies of statements may become easier. Small business owners should either download and backup electronic receipts and statements or print a hard copy to physically file.

Data security important for small businesses using cloud computing

Many small businesses such as day trading companies are turning to cloud computing for easy and affordable data storage and applications. For traders, this means taking care to keep files secure, as networks, servers and web channels are prone to cyber attacks and failures than can result in money lost from data corruption or compliance penalties.

Choosing the right services is key to maintaining security. One of the simplest means of saving money through cloud computing is basic office Software-as-a-Service, such as Microsoft Live or Google Docs. These hosted program suites, which include word processing, spreadsheets, presentations and other types of file creation, can be significantly less expensive than hard drive-based software, especially for start-ups or business owners investing in new hardware.

When choosing a data storage provider, such as a backup system or a file-hosting site, it's smart to investigate security procedures. For top safety of sensitive files such as financial transactions, data should be encrypted, sent to a server with an up-to-date firewall and fully password protected - meaning the user is the only person with access to the files, including the service provider.

Traders, along with a large percentage of other small businesses and consumers, already use a number of cloud computing services. Web-based email, for example, is part of the cloud, as are many smartphone and tablet apps. Ensuring data safety with these Software-as-a-Service options can be realized with hardware security programs that can help keep malicious intent such as malware at bay.

Mobile computing making day trading easier on-the-go

In the mobile computing age, the face of day trading is rapidly changing. At-home traders who need to keep a constant watch on the market were once tethered to personal computers or ran the risk of doing personal business on workplace hardware, constantly dependant on the reliability of internet connections.

Now that mobile computing has spread to nearly every industry, applications are abounding for ticker watching, stock analysis and buying and selling operations. The simple iPhone Stocks app, which comes standard with many models, follows gains and losses, gives change points and displays progressions in charts. Similar Android operating system apps abound, and finding the right app has become more of a matter of making choices based on style and ease of use and less about finding a properly functioning prototype of new software.

Some mobile device apps can also perform alerts and trades, effectively keeping an eye on the market when the user can't. Many major finance and trading firms have developed their own web-based software to keep up with the trend, and new releases of products are providing traders with added features such as updated news reports, tracking "dashboards" and secure account maintenance folders.

One concern the industry is exploring is the security of trading and storing financial information in the cloud - a term referring to online services such as data hosting and web-based software. Smartphone and tablet owners on open systems such as Android will want to take care to fully inspect an app before use, as software creation and hosting is less regulated. A legitimate service, however, should be as secure as online banking.

Choosing the right accountant

For those running day trading companies, trying to manage all of the company's accounting and bookkeeping needs along with their trading can be a complicated endeavor. For that reason, many may look to outsource their accounting work to an outside firm to save time.

However, BusinessNewsDaily reports there are a number of things business owners should consider when looking for the "right" accountant.

One of the first steps many business owners may take is to simply search for companies through a directory of accounting professionals or look online for firms which seem to have a good reputation. While effective, discussing the matter with others in the industry may be prudent.

"The best way to look for an accountant is word of mouth through similar type businesses," Joshua Dubrow of the New York State Society of Certified Public Accountants Small Business Outreach Committee told the source.

After finding a firm that seems appropriate, traders should also do some research about the company before handing over all of their accounting and tax records.

One simple way the source recommends is to ask if the accountant has any questions about the company. If they don't, that may be a sign that they may not be a good or proactive accounting partner. The more involved and experienced they are, the better value they may provide.

BND adds it's also important to specifically ask if the firm offers bookkeeping services if companies are looking for it. Some firms simply don't provide bookkeeping.