Running a successful business entails keeping accurate and timely financial information.
A CLEAR FINANCIAL PICTURE ALLOWS YOU TO MONITOR THE SUCCESS OR FAILURE OF YOUR BUSINESS. A GOOD RECORD KEEPING SYSTEM ALSO PROVIDES YOU WITH THE INFORMATION YOU NEED TO EVALUATE THE CONSEQUENCES OF YOUR FINANCIAL DECISIONS AS WELL AS TO ACCURATELY PLAN FOR THE FUTURE.
As a small business owner, you most likely rely on a CPA to do your taxes but what are you doing on a daily basis? Do you do your books late at night? Do you ask your spouse (who may have no experience doing books) to handle your daily financial information? It is best that you outsource these daily functions. Otherwise you will need someone in your organization to take on the responsibility of keeping an accurate set of financial records. It’s NOT JUST the first step in taking control of your financial information and operations — proper record keeping will not only assist to ascertain the value your business operations, it is required by the law.
Read more about record keeping basics below, then consider setting up your office using PAPERLESS record keeping system.
For starters, make sure that you file paid bills, canceled checks and other business documents in an orderly fashion and keep them in a safe place. You may use manila folders, filing boxes, or an accordion file divided into “car,” “utilities,” “entertainment” and so on. At a minimum, put receipts in the proper categories throughout the year so it would be easier to total them up at tax time. Staple the adding machine tape to each folder or stack of receipts. You are not required to keep records in a formal “set of books;” however, you need to find the best record keeping system that works for you.
Take record keeping seriously. A perfectly adequate record keeping system for a small business might include some or all of the following:
- Check register – preferably a separate bank account for your business and your payroll (if you have payroll). Make sure that when you receive your bank statement every month that you prepare bank reconciliation. This document will help you balance your checkbook.
- Summary of receipts of gross income – totaled daily, weekly or monthly. Keep track of where your money comes from, putting notes explaining the origin of all money received.
- Monthly summary listings of expenses – Disbursements record (check register or expense journal) showing payments of bills. This could be a purchase journal or an expense journal where you record all the transactions in which you paid out cash or checks.
- Asset purchase listing (equipment, vehicles, real estate used in business)
- Employee compensation record (if you have employees)
Now that you are familiar with basic record keeping requirements, you need to think about how you could take this to a paper less environment.
The paperless office is the future. It saves room, saves time, it is very simple to use, keeps the office neat and is 100% secure and reliable. No more overcrowded or messy file cabinets. No more archiving and storing your files each year – making new labels and file folders each year is a thing of the past!
At the start of a new year, it is a good time to look at how you handle all aspects of your business. Invest some time now and reap great rewards throughout the year.
