Besides records of income and expenses, they should be kept on what your business is about. Important records to keep tract of are records of events which affect your current or future income. For example deaths of horses, slipped foals, drought, disease or anything else that required unusual expenditures. My husband and I would breed 2 to 4 mares per year to excellent stallions. In one year we had a mare have a foal in the pasture while we were at work. We never found the foal (only part of an amniotic sac) – we think coyotes got the foal. That was a big loss because the stallion became infertile so we could not breed back to him. Another year the veterinary school could not get our mares bred. We used fresh and/or frozen semen and for some reason only 2 out of 4 mares conceived, even with multiple breedings. Both of these incidents resulted in lostincome and in the latter case high breeding expenses.
One should also keep records of business activities such as the date of events, location and programs your horses were used in. This is especially true to demonstrate how you market your horses. Any showing, racing, driving event can be a type of marketing your horse(s). If they win that is even better. Medical records should also be kept. Medical records can include deworming, vaccinations, emergency care, and farrier work. All of these records can be used in an audit to demonstrate how you manage your business and what if any unusual circumstance had a role in the profit margin.
Another record or summary to keep is if you make changes in your operational methods including adopting new techniques or abandoning unprofitable methods. For example over the years marketing of my business has gone from print to web-based. For boarding I also use craigslist which is free. In fact some magazines have gone out of business since I started. Record when and if you use social media or a web-page. Another change may be how grain is fed. I use to get bulk grain but have since gone to 50 lb. bags. The primary reason is the 50 lb. bags were approximately the same price and in my case when I owned and also leased a barn it was easier to work with the bagged feed.
Remember the goal of a business is to make a profit. If you are audited, the auditor will typically know nothing about horses and it is your job to describe your business as thoroughly as possible.