A Guide to Small Business Record Keeping
Many small business owners assume that the only reasons they need small business record keeping is for tax or audit purposes. However, good record keeping also plays a strong role in business planning. Having all of your financial, legal and sales data well organized and at your fingertips can help you identify growth opportunities, avoid pitfalls and make your money and your assets work harder for you.
Market Trends and Profit Margins
Organizing, maintaining and reviewing sales, supplier and inventory data regularly shows you where your business is growing and where growth may be stunted. If you’re seeing a dramatic increase in the sale of certain items, you might consider negotiating a better price with your supplier for purchasing larger quantities.
Likewise, if you’re seeing flat or decreased sales or your shelves are full of product that’s not moving, you may want to consider resale opportunities or discontinue stocking the item or items in question. Businesses also rely on this information to help determine the profit margin (or loss) on product, product line and overall inventory levels and provide supporting data for pricing changes.
Determining Capital Needs
Without a clear picture of a business’ financial health, it may be difficult to determine what your exact capital needs are. Whether you’re looking to pad your working capital or considering expanding your business, the more detailed your financial records are, the less likely you are to borrow more money than you need to.
Record Keeping Articles, Videos & HowTos
Small business owners have a lot on their plates, and they don’t need to be rushing around their offices looking for a tax document. Owners need to commit to keeping impeccable records, and these business record keeping tips can help make the process easier.
The success of your business depends on making sound decisions. Following good record keeping supports that goal, by providing you with an easily accessible reference tool for almost every aspect of your business.
Financial record-keeping is a personal thing. Use whatever organizational tools work best for you. Use what you are most comfortable working with. As with other areas of personal finance, the simplest approach is often the best.
A sound financial life depends on good records. Therefore you must have a system in place for monitoring and managing your finances that is both comprehensive and easy to understand. What you use and how you use it is up to you.
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