I came across a question today on Intuit's forums about how to clean up old open balances, both for vendors and for customers, without messing up the financial statements. This is something I've been meaning to write about for a while, but I haven't gotten around to it until now. So here is at least the first part of Backyard Bookkeeper's guide to cleaning up old mistakes.

I just wanted to post a few thoughts today about taxes. Modern media has really demonized the IRS, and it's really unfair and counterproductive, because now when people get behind, they are more inclined to run and hide. The fact is that's the worst thing you can do. The best course of action is to be proactive and contact them first. Have you ever called the IRS? They're really very nice. Much nicer, to be honest, than any collection agency. There's even a new link up on the IRS website about what your payment options are if you can't pay your balance in full by the due date.

What kind of records do you need to keep? Although the answer depends on what kind of business you run, there are some hard and fast rules you should keep. IRS Publication 583 is a great resource for small businesses about what records need to be kept. Here are some of my own thoughts on the issue.

Accounts Payable: