Maintaining well-organized records is essential for any business. Time and money can be wasted if records are lost or misplaced when you need them for things like customer account review or filling tax forms. There are different methods and tips business owners can use to achieve optimal recordkeeping. If funds are available, hiring a bookkeeper or CPA might be the best option and allows business owners to focus their time and effort on managing the business operations instead of paperwork.
The best time to choose a recordkeeping and accounting method is before opening a business. The method you choose depends on the type of business you are operating. Retail stores will need to manage inventory and process register tapes. Service businesses usually keep track of labor charges and vehicle expenses. Online businesses have minimal overhead but will need to track sales, cost-of-goods, and delivery charges. Corporations have additional recordkeeping obligations they are required to keep.
Accounting software is available to manage the day-to-day income and expense records of a business. Once the accounting software is set up, you will simply add each day's sales totals including materials, labor, delivery charges, and sales taxes collected. Next, you will enter all the expenses incurred during the month like replacing inventory, utility bills, salaries, etc. Once everything is entered into the software, you can pull different types of reports to analyze each month's business activity.
The main purpose of keeping business records is to monitor sales and expenses. But there are many other reasons to maintain good records. If you have employees, you will need to keep track of hours worked, check payroll deductions for each employee to make sure they are accurate, file government payroll tax forms, etc. Accurate business records will show banks how your business is doing when applying for loans. Also, your records will help you plan spending budgets and expansion projects.