As a small business owner, you might have figured out by now that getting organized and taking good notes only improves your ability to do business well. You’re more efficient with your time, you launch into tasks quickly, and document processes that work.
The same thing goes for being a good business record keeper—or a better business record keeper at that. And when we talk about record keeping, we don’t just mean compliance and legal stuff (even though, sure, that can be a large reason for keeping good records).
But keeping good business records is also super important because it means you’ll be able to have accurate documentation for the stressful times of year. Good business records mean that tax season goes smoothly, you’ll be up to date about how your processes affect the health of your business, and you’ll be able to make decisions that will determine future of your business.
Why Become a Better Business Record Keeper at All?
Fair question. We’ll ask you one right back: Does saving stress and optimizing your time sound like a good idea? We thought so:
Ensure you’re compliant with federal, state, and industry laws.
Virtually every type of business needs some type of business license or permits to legally operate. And, if you’re an employer, it’s your responsibility to verify that an employee is eligible to legally work in the US. And, once that’s done, you’ll need to know what their withholding rate should be for federal and any applicable state or local taxes.
Once you’re up and running, you might also have contracts with customers, clients, or even vendors. You might see by now that being a better small business record keeper means keeping track of all of this and being able to find it quickly if needed.
Have a smooth(er) tax season.
We say “smooth(er),” since no small business owner swoons over tax season.
But! A clean, up-to-date, and accurate set of books means that you’ll be better equipped to face tax season. It also means that your tax preparer will be able to better serve you. By having everything allocated correctly and receipts and other source documents readily available when your tax preparer asks, you’re more likely to have your business taxes done sooner than a business in disarray.
Keeping your records detailed and your books current ensures that you’re able to work with them throughout the year to monitor any estimated taxes and make any needed adjustments to those estimates.
Improve your business function.
Being a better small business record keeper can also mean documenting how you run your business.
Going through your processes and documenting them is a great way to make sure everyone is on the same page. It makes it easier to cross-train existing employees and allows onboarding new ones to go more smoothly. And that’s because owning a business means a lot of stuff to keep track of: customer and sales records, vendors and purchase records, employees and paycheck records, but also the workflow for creating all of these records.
Influence your future.
Knowing what’s happened in the past allows a business to make informed decisions about the future. Being a better small business record keeper means you’re tracking who your customers are, what they’re buying, and previous pain points from a customer perspective.
With more detailed records, you can see sales trends, like what time of year is busy or slow, or what product or services are more popular. You’ll also have more time on your hands to plan on purchasing. For instance, if you know a busy time is around the corner, you can forecast how much cash you need and how much product to purchase, or start looking for new hires or temporary help.
How to Become a Better Business Record Keeper
1. Don’t co-mingle your finances!
This deserves that exclamation point.
We mean to keep your personal finances separate from your business finances. It’s okay if you’re using a card that’s in your personal name for business transactions. Just make sure that all of the expenses are business related and that they’re always paid from your business account. This makes it much easier for your bookkeeper to do the books, and it’s easier for you to locate business expenses.
A note: Beyond “easy for your bookkeeper,” we should also mention that if you don’t keep your personal and business finances separate, and you’re an LLC or a corporation, you need to get on that. That’s because you won’t be afforded the personal legal protections granted by your business entity if you don’t have distinct business and personal separation. (You can get yourself a business bank account and a business credit card here to kickstart that process.)
2. Keep things simple.
Make the process you set up trainable, repeatable, and scalable. In other words, you don’t want something like this:
There’s no sense in creating a system if only you understand it—if you come back to pages you wrote earlier in the year, and your notes look like hieroglyphics, even though you were the one who wrote them, something needs to change.
3. Figure out who has access.
Which employees have access to what records? Who owns the process of keeping them up to date?
Different team members may “own” different workflows, but you as the owner should always have access to everything. And, like we said above, make sure that everyone’s method of keeping records is consistent across the board.
4. Decide on your suite of integrations and apps.
Do you need receipts to be read and entered automatically? Or do you just need to attach a file to a transaction? Maybe you need something to fetch statements and check images? Will employees need to capture receipts for reimbursement?
There are lots of different types of finance apps and business accounting software that can combine to keep the perfect records for your business.
5. Create a scheduled appointment to audit your records.
Spot-check transactions often. To make sure that you do, set appointments in your calendar, just like they were mandatory meetings, to make sure you’re following through, and that everyone else with access to your system is doing it consistently, too.
6. Evaluate your system regularly.
Evaluate your tool and the process at least annually to make sure it’s still the best system for you. Your business evolves—and your record-keeping system should, too.
Create a calendar reminder 60 days before an annual renewal payment to do a needs and/or workflow analysis to determine if the accounting software and processes you’re using are still the best fit. Let’s say you started out as a sole proprietor and the QuickBooks Online mobile app worked just fine. But in the last year you’ve grown and hired employees. Entering transactions might not be the best option, so you might want to look at another option.
Upgrade Your Record-Keeping Skills Starting… Now
One more thing: Check out this great guide from the IRS about how long small business owners should hold onto records. It’s a great complement to everything you’ve just gained about how to become a better business record keeper.
The post 6 Tips to Become a Better Business Record Keeper Right Now appeared first on Fundera Ledger.
from Fundera Ledger https://www.fundera.com/blog/better-business-record-keeper
No comments:
Post a Comment