Record Keeping For Small Business Advantages And Tips

Writen by Alexander Gordon

In order to be a success in the business world, you need to keep track of all the sales, proceeds, and turnover of your business. Here we are discussing what you need to know about record keeping for small business: methods, indicators, and advantages.

Advantages of Record Keeping for Small Businesses
There are several advantages to keeping proper records of transactions for your small business.

Financial Statements
Financial records help you prepare financial statements. These records are needed when borrowing from a lending agency or getting audits done.

Business Analysis
Financial Statements help you in business analysis and in checking the health of your small business. You can see which sectors are bringing in more profits and where your business is suffering losses.

Cash Flow
Proper records help you keep track of the cash flow to your small business and of the sources of payment.

Tax Returns
While filing tax returns, a detailed financial record helps you keep track of your expenditures and file for appropriate rebates.

Because record keeping is so crucial to almost all aspects of your small business, what is the optimal way of keeping records? The following section discusses some record keeping tips.

Tips for Record Keeping
Update Daily
Daily updates keep you from being buried under a mountain of paperwork at the end of the month or at the end of the financial year.

File Receipts Under Proper Headings
Keep track of who gave you which receipt, when, and why.

Keep a Record of Expenses
Keep track of all your expenses and where and when you spend money.

Different Businesses If you own more than one small business, keep separate records for each.

Documents Needed for Record Keeping
You need to file certain documents in the proper places if you wish to maintain a proper record of your finances. Purchases, sales, payrolls, and receipts must be preserved safely. Keep a separate folder for these documents. Keep records of bank receipts, cash register bills, and credit card receipts that are proof of your income. Suppliers' receipts document your buying and selling transactions. These receipts should also be filed separately. Keep documents related to business expenses. Small cash payments should also be recorded, and you should have a cash disbursement slip ready. Documents related to assets, both movable and immovable, should be preserved so that it makes auditing and accounting easy. If your small business employs other people, you should keep employee compensation records.

Record keeping is crucial if you want to have a clear idea of your financial transactions and save yourself the trouble of locating misplaced documents when it is time to pay taxes. If you need help with record keeping, you can hire the services of a small business advisor or take appropriate software.

Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business. Business Owners all across the country are joining "The Community of Small Business Owners" to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.