Starting a new business? Get your records straight

I have the opportunity to chat with folks who are seeking help as they are thrust into this transition that absolutely scares them. I will address some of these issues in my next columns. I will start with one of my last requests. This person has lost their job. After trying to find the “right fit for employment” this mentoring request was for help to “get me started in a new business.”

“Where do I begin, and how do I know what kind of information I need to keep for running a business” was this person’s first question.

Thorough record keeping is a critical part of running a successful business. So let’sstart with 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 don’t enter the world of entrepreneurship to file taxes, keep inventory logs, and track mileage. Record keeping, however, is a part of the job when you’re running a business, and it has to be done right.

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
  • Contracts
  • 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

A major reason that most small businesses fail can be traced to CEOs who are “good at what they do and love to do” but do not love to do record keeping and usually are not good at it. So, my advice is always to seek easy-to-use tools that will take the hassle out of the record keeping.

Organization is the key ingredient in good, thorough record keeping. There are several tools out there to help business owners get organized, including software-based solutions, cloud-based solutions, and, of course, paper-based solutions. Most record keeping 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 a quick overview of some of the best record keeping solutions available for small businesses.

The trick with record keeping is to keep things simple. Basic software solutions such as Microsoft Excel spreadsheets and Microsoft Word documents can provide a simple, easy-to-use solution for businesses that only require a few record keeping 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, don’t 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’s 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. Or, 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’re a small service business, a simple cloud-based accounting system like FreshBooks might 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. And, 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’s nothing wrong with using pen and paper to keep your business’ records in order. If you choose to use paper, be aware that paper record keeping is a commitment. You’ll 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 can’t afford to lose and store them somewhere safe.

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 log-in 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 record keeping tools is a necessary and important part of running a successful business. But, it isn’t always an easy or straightforward process. When you’re ready to rethink record keeping 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 record keeping best practices and help you stay organized. Contact a SCORE mentor by going to .

Dean Swanson is a volunteer Certified SCORE Mentor and former SCORE chapter chairman, district director and regional vice president for the North West Region.

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