Just a thought. When I go into an tax audit, the IRS (or state) agent starts with the bank statement, assumes all deposits are taxable income and none of the disbursements are deductible. It's up to me, my client and the bookkeeping system to lead the agent to source documents (receipts, invoices etc.). After the agent has seen a system that verifies the taxable income and deductible expenses by matching the receipts, invoices etc., the audit moves onward smoothly. If we can't find the source documents, the agent is free to include all unmatched deposits in income and deny any unmatched expenses. Just having a bookkeeping system that lists income and expenses doesn't get the job done. You have to be able to convince a skeptical agent that you have proof for every entry. Once you have this type of bookkeeping system in place, you can also rely on your financial statements to provide useful management information.