Tip of the Month: Small Business Record Keeping

This month’s topic might be more of an obvious reminder, but following this tip can save you plenty of time, stress and money in the long run. Keeping up with your paperwork, specifically your financial records and statements, on a monthly basis (or more often if you have a high volume of transactions) will provide plenty of perks including:

  • A clear picture of your business’ financial health;
  • Greater awareness of spending, which can help you control and lower operating expenses;
  • Less time and worry when you have to file income tax and GST remittance;
  • Being prepared for an audit, if ever the situation arises;
  • Improving your odds of securing capital, such as a loan for growing your business, by being able to clearly outline your company’s past performance; and
  • The ability to identify sales trends based time of year, marketing expenditures and so on.

Have we convinced you yet? We hope so. Understanding your business’ financial health can make you far more competitive and profitable.

What if I haven’t been keeping these records up to now?

Catching up can be a daunting task, so unless there’s a pressing need, it’s easier to break the job down into bite-sized pieces. Update your current month, along with the earliest month for which records have not been kept up. For example, if you started your business last January, then right around now you should do January’s records along with July’s. Next month, do February’s records along with August. This strategy will allow you to keep up with your current record keeping and catch up at the same time.

A note about business receipts

Keep your receipts and file them in an envelope labelled with the month in which they occurred. If the receipt isn’t obvious, or you’re worried about it fading (say perhaps when you leave it on the dash of your truck for two weeks, you crazy entrepreneur, you!), make a little note on the back about what it was for and what job you billed it to if that applies to your business.

If record-keeping becomes too much

Recognize when it’s time to bring on someone else. If record keeping is consistently put on the back burner so you can handle the immediate needs of your business, or if you struggle to understand how it works, find a bookkeeper. They need not be an employee. Independent contractors are a great way to manage jobs like this. Don’t feel bad about it – the key is that the job is done well and on time. No one is a specialist at everything, so play to your strengths and find someone who can help you counter your weaknesses. If you aren’t in a position to hire someone else, there are plenty of software programs that can help you out providing a layout, streamlining data and saving time for you.

Financial record keeping for your small business can be intimidating, but breaking it down into small pieces and staying up to date will save you time, money and stress. That’s something we all can benefit from!

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