Why Good Records Are a Lifeline for Your Business

Imagine this:

You run a small food delivery service in Lagos. Every day, you collect ₦5,000 here, ₦10,000 there, all via transfers into your account. At the end of the month, your account shows ₦600,000 in inflows.

Now, without proper receipts or an expense record, the government (through FIRS or your bank) sees ₦600,000 as pure profit. They don’t know you spent:

• ₦200,000 buying food supplies

• ₦100,000 on delivery riders

• ₦50,000 on packaging

• ₦80,000 on fuel and logistics

In reality, your actual profit was closer to ₦170,000, but without records, you may be taxed as if you made ₦600,000.

That’s the difference between paying a fair tax and being overtaxed.

 Receipts Are Your Proof of Expenses

Think of receipts as your business shield.

 Example: You buy ₦50,000 worth of raw materials from Mile 12 Market. If you don’t collect a receipt (or at least record it), that expense becomes invisible. Come tax season, the ₦50,000 looks like money you kept for yourself.

 Another example: You pay ₦120,000 to a mechanic to fix your delivery van. No receipt? The taxman assumes that’s still in your pocket.

Lesson: Every expense without a receipt (or record) becomes taxable income in the eyes of the law.

How Poor Records Hurt Small Businesses

Here’s what happens when you ignore record-keeping:

• Higher taxes: You pay tax on money you never really earned.

• Cash flow confusion: You can’t tell if your business is actually making profit or just turning over money.

• No access to loans: Banks ask for financial statements before approving loans. Without records, you can’t prepare one.

• Audit headaches: If FIRS asks you to justify your income, you’ll struggle without receipts.

How to Keep Good Records Without Stress

Keeping records doesn’t mean hiring an expensive accountant. Here’s a simple guide for small businesses:

• Use a notebook or Excel sheet – Write down every sale and every expense daily.
• Always ask for receipts – Even from small suppliers. If they don’t give, write one yourself and make them sign.
• Save digital receipts – Screenshots of bank transfers, PDF invoices, WhatsApp payment confirmations… keep them in a folder.
• Separate personal and business – Never mix. That way, every naira in your business account is business-related.
• Review monthly – Add up your sales, expenses, and profit. This makes tax filing much easier.

Why This Matters for Small Businesses in Nigeria

Small businesses already operate on tight margins. Imagine losing 20–30% of your money to over-taxation just because you didn’t keep receipts.

• If your business made ₦3,000,000 in revenue but spent ₦2,200,000 on costs, your real profit is ₦800,000.
• Without records, FIRS may assume ₦3,000,000 is profit and tax you based on that.
• At just 20% tax, that’s a difference between paying ₦160,000 (fair tax) and ₦600,000 (unfair tax).

That could cripple your business.

Final Word

Keeping good records and receipts isn’t just for “big companies.” It’s survival for small businesses. With the new Nigerian tax policies targeting inflows into personal and business accounts, the easiest way to protect yourself is by:

1. Opening a separate business account

2. Keeping every receipt, every time

3. Recording your daily sales and expenses

Your future self (and your business) will thank you when you pay fair taxes and avoid unnecessary penalties.