Small business owners often are under pressure for so many different things. The list is nearly endless. They’re raising money from investors, building a customer base, seeking dependable employees, ensuring steady and dependable supply chains, and determining effective marketing techniques.
This group of entrepreneurs has so many responsibilities to consider, that some things occasionally get overlooked. This may include the business books. Not only is solid record-keeping essential for your small business, it’s also a legal requirement.
Some ways good records help
Keeping good business records can help you:
- Monitor the health of your company. By keeping invoices and receipts, you have a better idea on how to track expenses.
- Demonstrate to banks, prospective lenders and prospective buyers of your business the solid financial footing of your business.
- Prepare tax returns. Tax experts agree that business owners who fall behind on their tax responsibilities also maintain poor business records. Who wants to have an audit from the Internal Revenue Service?
A combination of unrecorded sales, staff wages kept off the books as well as discrepancies between purchased supplies and the goods and services sold can lead to a big financial mess. By maintaining accurate records, a business owner has created an easy and effective way to keep the company in good legal standing.
Besides finances, policy records are good, too
You also must make sure to separate your business finances from your personal finances. This will eliminate confusion between the different parts of your life. Also, hiring an accountant to help or purchasing record-keeping software could be good solutions.
But accounting and finance records aren’t the only type that should be maintained by business owners. An employee handbook that highlights the vision, value and policies of the company as well as expectations of every person who is hired. This could include policies on discrimination and sexual harassment.
Keeping good records not only will help you in areas such as time management, but also give you a better understanding of your basic tax responsibilities. By not keeping solid business records, you’re creating unwanted stress for yourself and your employees. Who wants that?