What information does my business need to keep?
Most business owners go into business to build, create, and deliver valuable products or services to their customers. They don’t enter the entrepreneurial world to file taxes, keep inventory records, track mileage, and more. Record keeping, however, is part of the job of running a business, and it needs to be done well.
If you own a business, record keeping is provided with the territory.
No matter what type of business you own, every small business should keep detailed accounts of major business records. Your industry may have additional requirements, but, at a minimum, make sure you have this list of essential records up to date and on hand:
- Accounting Archives
- Accounts payable
- Accounts receivable
- Expense receipts
- Payroll records
- Tax returns
- Vehicle mileage logs
- Bank and credit card statements
- Buy online
- Licenses and permits
- Insurance certificates
- Job applications
And larger companies may need a little more:
- Articles of incorporation / Certificate of organization
- Operating agreements
- Minutes of the annual meeting
- Trademark, service mark and patent registrations
- Inventory logs
Easy-to-use tools that simplify record keeping
Organization is the key ingredient to good comprehensive record keeping. There are several record keeping tools to help business owners get organized, including software solutions, cloud solutions, and of course, paper solutions. Most record keeping tools are designed to maintain your accounting records on a daily, monthly, and yearly basis.
Also look for data storage solutions where you can store and back up all your recordings on an external server or in the cloud. Here’s a look at some of the best record keeping solutions available for small businesses.
Basic software solutions like spreadsheets can be a simple and easy-to-use solution for businesses that only need a few basics of record keeping. Quickbooks Pro is a more sophisticated software solution that you install on your computer.
If you decide to use software solutions to save your recordings, don’t make the mistake of just storing everything on your computer’s hard drive. Get into the habit of backing up your recordings daily, whether it’s to a secure server, external hard drive, or cloud-based system.
There are free or low cost solutions like Google Drive and Dropbox which are ideal for simple file storage. Or, you can invest in a cloud-based backup solution, like Carbonite, which supports automatic file backups for all your critical documents with added security.
Cloud-based paperless solutions have grown in popularity in recent years, and the tools businesses can access are increasingly sophisticated and easier to use. If you’re a small service business, a simple cloud-based accounting system like FreshBooks may be all you need to manage your books. For smaller, more complex businesses, like those that manage inventory, Quickbooks Online is a great cloud-based option.
Going paperless eliminates the need to file and store countless receipts and paper documents, saving you time and helping you stay organized. And, many of these tools will sync directly with your work bank account and credit card to automatically record expenses for your records. Look for options like digital receipt filings that allow you to scan physical receipts and turn them into digital records, eliminating the hassle of paper records.
If you prefer to do things the old-fashioned way, there’s nothing wrong with using pen and paper to keep your business records tidy. If you choose to use paper, be aware that paper record keeping is a commitment. You will need to update your records daily to stay up to date, be consistent in how you record information and organize your paper documents. Make sure to create duplicates of the most important documents that you can’t afford to lose and keep them in a safe place.
Work with a professional accountant
Keeping good records of all your accounts and business activities will pay dividends at tax time. At the end of the tax year, turn your business records over to a professional accountant. If you are using a cloud-based solution, most systems allow you to provide your accountant with a unique identifier so that they can directly access tax documents and business records without you having to take any additional steps.
No matter what system you use, well-organized record keeping gives your accountant the information they need to accurately report your business taxes on your behalf and keep your business in good standing with the IRS.
Maintaining accurate business records and using proper, easy-to-use record keeping tools is a necessary and important part of running a successful business. But, it is not always an easy or straightforward process.
When you’re ready to rethink record keeping for your business, do it with the help of a SCORE mentor. A SCORE mentor will help you create a process for daily, weekly and monthly record keeping best practices and help you stay organized. Contact a SCORE mentor today.
Ken Sethney is a volunteer business mentor with Kitsap SCORE. He is a former advertising agency creative director and marketing coach who has worked with mid-size business owners across the United States. Contact Ken by email at [email protected]