Thursday, March 2, 2017

4 Reasons Why Small Business Owners Need to Keep Meticulous Records

In the rush to get orders completed, client projects started, and inventory put away, some small businesses end up neglecting record keeping processes. Though it feels easier to fudge a few things now, meticulous records matter in many aspects of running your business, from keeping track of employees to filing your business taxes. They can not only help you find important documents down the road, but also save you from legal troubles down the road. Here are four reasons a small business should keep meticulous records.

Tax Season is Easier

Businesses take a lot of tax deductions. Sometimes those deductions depend on your keeping track of your receipts and business expenses. The IRS won’t accept bank statements and bookkeeping, no matter how detailed, as adequate records to prove you actually incurred those business expenses. They want receipts.

Keeping track of receipts may seem annoying and messy, but it’s an essential part of your business’s record keeping. To make it easier on yourself, scan your receipts with a Neat scanner or take pictures of them with your phone. Digital files will keep your paper clutter down, and they’re much easier to archive and reproduce when tax season comes and you’re trying to figure out your total deductions. By the way, you’re allowed to write notes and clarification on those receipts, too. Write down which client you took to which restaurant for what kind of meeting, so you can jog your memory when you look at the receipt a year later.

Tracking Employee Attendance is Simpler

Every office has some form of time sheet to keep track of employee attendance. Paper time sheets or punch cards are extremely inefficient ways of keeping track of employee hours. They can get lost, altered, or damaged, which leaves you left guessing.

Keeping detailed attendance records feeds directly into your payroll needs. When you’re paying employees, it’s much easier to have digital data from computerized clocking in and out, integrated with accounting software that writes your checks for you. Plus, if you ever need to go back to check the records or import any of this data for tax purposes, it’s all right there in the software.
You’ll Know Which Clients Have Paid
Speaking of money matters, invoicing is a big deal for almost every business. You have to keep track of whom you’ve paid and who has paid you, and trying to do that on your own these days is just silly when so many great software resources are available to help you.

Keep detailed records of the kind of services you provided each client, how many hours were logged on each part of the project, when you sent out each invoice, and when the invoices are due. When you go with all-in-one software like Sage 50 accounting, keeping track of projects, products, and invoices is a simple and seamless process. If a client ever has an issue, you can turn to the software to easily produce the data you need to show that the work was done correctly and in a timely manner. You can point to each hour the client is paying for if you have to.
Personnel Files Will Be Up to Date
Once you’ve hired employees, you need certain data about them for enrollment in your health insurance coverage, retirement savings plan, and other employment perks. However, having some of this information when you’re actually in the process of hiring someone is illegal, because it can technically lead to discrimination. Asking someone about their age, marital status, race, and a host of other things isn’t allowed during the hiring process.

If you need any of this information after you’ve hired someone, and it goes in their personnel file, you want to be able to prove that none of it was on the application. That’s why keeping meticulous application, interview, and hiring records is so essential. Should a legal problem ever arise, you’ll be able to prove that you didn’t gather that information until that employee had already been hired.

A little extra time spent each day keeping meticulous records is worth the effort. Not only will you track every cent your business makes and spends, you’ll have a much easier time filing taxes, assessing employee performance, and reporting to clients about the jobs you’ve done for them.

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