Maintaining good business records might seem like a chore – and it is. But it’s a chore that can make a big difference in how your business operates. For example, Charles owned the Charleston Chocolate and Confections Company. He poured all his attention into developing new ways to use chocolate and front office activities like selling to clients. However, Charles sorely neglected back-office duties like recordkeeping. At some point, this might come back to haunt him if he misses government compliance deadlines. Charles could also be missing a rich chance to improve the quality of his company’s future.
This article explores four reasons that business owners should keep good business records.
Detail Tracking
Even in smaller businesses, owners will need to identify and track business-related information. The data varies from company to company based on variables like industry, size, and location. However, some of the common data points include:
- Inventory,
- Vendors,
- Sales,
- Clients and customer data, and
- Cash flow.
Failing to track or control this information could be detrimental to the company. For example, you might promise a client that you’ll send their order today. Then you find out too late that you don’t have the inventory to fill the order. Keeping good business records could prevent this type of mistake.
Planning
Business owners don’t typically open a business willy-nilly. They need to know specifics about:
- the products or services they will offer,
- the client base they will target, and
- the financing they need to acquire inventory and other business needs.
But recordkeeping and planning are not just about the starting days of a business.
Going forward, business owners will use their business records to make sure they know and can meet current demand. They may look ahead a month, a quarter, or a year. Either way, their business records will be invaluable. In fact, the company may falter if it’s unable to maintain inventory to meet future needs.
Legal Compliance
This reason for keeping good business records is hugely important to your company. Depending on your industry, you might be required to acquire and renew licenses and permits to satisfy local, state, and federal regulations.
Also, you need to maintain copies of your contracts, leases, and other agreements for future reference. For example, you might need to review copies of contracts if a legal dispute arises with a vendor or client.
Payroll business records are particularly important to organize and keep in good shape. Your company needs to adhere to legal obligations. In addition, most business owners track employee expenses and use them in making future business plans.
Tax Preparation
This type of business recordkeeping involves financial and legal obligations. As a business owner, you will need to have a clear idea of your earnings and your expenses. Having well-organized records can be a real bonus when it’s time to do your state and federal income tax returns. It can also keep you out of trouble with the Internal Revenue Services.
A certified public accountant (CPA) might help you set up your business records and then maintain them throughout the tax year.
Call to Discuss Forming Your Business and Keeping Good Business Records
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.