Recordkeeping 101: Information Your Small Business Needs to Maintain
Thorough recordkeeping is a critical part of running a successful business. Here is a list of the essential records all small business owners should maintain and some of the best tools out there to store your records and stay organized.
Most business owners get into business to build, create and provide valued services to their customers. They do not enter the world of entrepreneurship to file taxes, keep inventory logs, and track mileage. Recordkeeping, however, is a part of the job when you are running a business, and it has to be done right.
If You Own a Business, Recordkeeping Comes with the Territory
Regardless of the type of business you own, every small business needs to keep detailed accounts of key business records. Your industry may have additional requirements, but, at a minimum, have this list of essential records up-to-date and within reach.
- Accounting Records
- Accounts Payable
- Accounts Receivable
- Expense Receipts
- Payroll Records
- Tax Filings
- Vehicle Mileage Logs
- Bank and Credit Card Statements
- Purchase Orders
- Licenses and Permits
- Certificates of Insurance
- Employment Applications
- Articles of Incorporation/Certificate of Organization
- Operating Agreements
- Annual Meeting Minutes
- Trademark, Service Mark and Patent Registrations
- Inventory Logs
Find Easy-to-Use Tools that Take the Hassle Out of Recordkeeping
Organization is the key ingredient in good, thorough recordkeeping. There are several recordkeeping tools out there to help business owners get organized, including software-based solutions, cloud-based solutions, and, of course, paper-based solutions. Most recordkeeping tools are geared for maintaining your accounting records on a daily, monthly and annual basis. Also, look for data storage solutions where you can store and back-up all of your records either on an external server or in the cloud. Here is an overview of some of the best recordkeeping solutions available for small businesses.
The trick with recordkeeping is to keep things simple. Basic software solutions like Microsoft Excel spreadsheets and Microsoft Word documents can be a simple, easy-to-use solution for businesses that only require a few recordkeeping basics. QuickBooks Pro for desktop is a more sophisticated software solution that you download to your computer.
If you do decide to use any of these software solutions to record all or a portion of your records, do not make the mistake of only storing your documents on your computer’s internal hard drive. Make a habit of backing up your records daily, whether it is on a secure server, external hard drive, or a cloud-based system. There are free or low-cost solutions like Google Drive and Dropbox that are great for simple file storage. Alternatively, you can invest in a cloud-based back-up solution, like Carbonite, that takes care of automatic file back-ups for all of your critical documents with increased security.
Paperless cloud-based solutions have grown in popularity in recent years and the tools businesses can access are becoming more sophisticated and easier-to-use. If you are a small service business, a simple cloud-based accounting system like FreshBooks may be all you need to manage your books. For more complex small businesses, like those that manage inventory, QuickBooks Online is an excellent cloud-based option.
Going paperless removes the need to file and store countless receipts and paper records; saving you time, and helping you stay organized. Moreover, many of these tools will sync right to your business bank account and credit card to automatically pull expenses into your records. Look for options like digital receipt filings that let you scan physical receipts and turn them into digital records, eliminating the hassle of paper records.
If you prefer doing things the old-fashioned way, there is nothing wrong with using pen and paper to keep your business’ records in order. If you choose to use paper, be aware that paper recordkeeping is a commitment. You will need to update your records daily to keep up, be consistent in how you record information and be extremely organized when filing your paper documents. Be sure to create duplicates of the most important documents that you cannot afford to lose and store them somewhere safe.
Work with a Professional Accountant
Keeping good records of all of your business accounts and activities will pay dividends come tax time. At the end of the tax year, turn over your business records to a professional accountant. If you use a cloud-based solution, most systems allow you to provide your accountant with a unique login so they can access tax documents and business records directly without you doing any additional leg work.
Whichever system you use, keeping well organized records gives your accountant the information they need to file your business taxes accurately on your behalf and keep your business in good standing with the IRS.
Maintaining accurate business records and using the right, easy-to-use recordkeeping tools is a necessary and important part of running a successful business. Nevertheless, it is not always an easy or straightforward process. When you are ready to rethink recordkeeping for your business, do so with the help of a SCORE mentor. A SCORE mentor will help you create a process for daily, weekly and monthly recordkeeping best practices and help you stay organized.
Since 1964, SCORE “Mentors to America’s Small Business” has helped more than 10 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in over 320 chapters serve their communities through entrepreneur education dedicated to the formation, growth and success of small businesses. For more information about starting or operating a small business, contact SCORE TriCounty, https://tricounty.score.org/content/find-mentor-183.
Today at SCORE, we are on the frontline fighting to keep Main Street America in business. If you believe that you can help a small business with your experience, advice and mentoring please think about joining us. Email us at email@example.com, call us at 610.327.2673, or to learn more. To submit an application to be a SCORE TriCounty volunteer, visit our website at https://tricounty.score.org/become-volunteer-2.
SCORE is funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author and do not necessarily reflect the views of the SBA.