The adage no job is finished until the paperwork is done was born in the business world and remains an integral part of starting and maintaining a business. Proper record keeping not only will allow you to keep a handle on expenses and use past figures for future planning far more accurately than your memory, it will also keep you out of trouble with taxes and government regulations. Here are some key points to keep in mind when setting up the office for your new business.
Why Keep Records of Everything
The simplest reason is it is often the law that you maintain records for certain periods of time. Things like taxes can be audited for up to 7 years after being filed. Without supporting documentation to verify sales receipts and expenses to go with those filings you may end up liable for large sums of money in back taxes and penalties if you get audited. While this is the most obvious, it is not the only reason.
If a vendor you purchase merchandise or services from sells out or goes bankrupt and they have not maintained adequate records (very common in a failing business) the new owners or the bankruptcy judge may bill you or require you to prove you paid. If they cannot verify it themselves and bill you again and you cannot prove you paid then you will be liable for paying again. This is in addition to normal billing disputes that may occur.
Retail sales records may be needed if you sell an item that is later recalled. As the seller, you bear a responsibility sometimes to furnish information to the manufacturer or government in the event of a serious safety recall. Not only does this cover requirements, it is good socially responsible business practice that will gain loyalty of customers.
It Pays to Keep Records
If you are making out orders for the holiday retail season having the previous year’s sales results in black and white in front of you will allow more accurate ordering. It will also allow you to look at leftover stock from January inventory reports to reduce the order amount of items that did not sell well and make a valid business decision to either order more or increase the selling price (and profits) on items that sold out quickly. Relying on memory of what the hot seller was is haphazard at best. You may remember an item sold fast but without the reminder on paper that your net profit on the item was nearly zero, you are setting yourself up for a mistake.
Storage of Records
Retail space and even commercial office space is too expensive to waste square footage on maintaining boxes of old records used rarely. It is also a good security measure to have records in a safe offsite location to ensure they remain intact in case of fire, flood, or other disaster. Access Self Storage provides a secure offsite location to maintain years old records that will not eat up valuable commercial footage and is affordable.
Starting good book keeping practices and storage of records when you open your business will protect your business in future years and help reduce costs of marketing and inventory control.