Why New Busi­nesses Keep Records

Good record keep­ing shows how a busi­ness is doing – it’s prof­itabil­ity, items sell­ing, and ser­vices being used for instance. Busi­ness own­ers uti­lize records to ana­lyze sta­tus and pin­point what changes or improve­ments to make. Keep­ing good records is vital for your busi­ness success.

Before the paint dries and the doors open, a small busi­ness starts to leave a paper trail of doc­u­ments and busi­ness oper­a­tions – receipts, bank trans­ac­tions, pur­chase orders, maybe even rev­enue. Before long, you’ll be called on to show your income sources and expenses, as well as employee-​related records, includ­ing all employ­ment taxes. OSHA also has record keep­ing require­ments. Before the year end, you’ll start to won­der how your busi­ness is fair­ing – are you still on track or got­ten off course some­where along the way?

Expenses, pay­roll records, receipts, bank state­ments, accounts receiv­able, and accounts payable are some records busi­nesses must retain in a detailed, con­sis­tent, and timely man­ner, regard­less of the type of sys­tem you choose to use. So before you mis-​place any impor­tant infor­ma­tion, you need a sys­tem for record­ing and track­ing – well, everything.

While it’s still viable to main­tain tried-​and-​true ledgers using the proper forms pur­chased at a sta­tionery store, more small busi­nesses have turned to the con­ve­nience of com­puter soft­ware for book­keep­ing and record keep­ing chores.

If you do choose to use a com­puter soft­ware pro­gram to record rev­enues and expenses, take time to exam­ine serveral pos­si­bil­i­ties before you make a final selec­tion. Start by look­ing at some of these:

• Quicken by Intuit (Single-​entry accounting);
• Microsoft Money (Single-​entry accounting);
• Quick­books from Intuit (Double-​entry accounting);
• Peachtree Account­ing from Sage Soft­ware (Double-​entry accounting).

All the above soft­ware is avail­able at Ama​zon​.com together with reviews that may help you nar­row the field.

If you sell prod­ucts, you’ll need good inven­tory records for man­ag­ing sales, inven­tory hold­ings, track­ing buy­ing trends, sea­sonal activ­ity, and theft. These records let you see stock on hand vs. the stock pur­chased, pur­chase dates, prices, sale prices, and sold infor­ma­tion. Again, sta­tionery stores carry the ledgers or note books to keep track of your inven­tory. Many busi­nesses choose to rely on inven­tory soft­ware packages.

Quick Books, Microsoft Money for Busi­ness and Peachtree among oth­ers pro­duce stand-​alone inven­tory software.

Tips:

Most small busi­nesses use a rev­enue and expense jour­nal (single-​entry method of account­ing). Oth­ers use a com­plex double-​entry sys­tem which records deb­its and cred­its for each entry.

Many new busi­ness own­ers pre­fer spend­ing their time on other aspects of their busi­nesses instead. Oth­ers may need a pro­fes­sional to set up an ini­tial records/​bookkeeping sys­tem. If that’s you, hir­ing some­one with book­keep­ing skills for a few hours per week, may be the best solution.

If you’re look­ing for the ser­vices of a CPA, check out the  AIPCP site