Tweet

Establish Records Systems at Startup for Long-term Success

Guest post by: K. MacKillop

Article Overview: Keeping good business records is a critical part of running a business correctly. In the rapid-fire pace of a business startup, it's easy to put off record keeping until things slow down -- which never happens. Use these tips to get your business, and its records, set up for success from the beginning.

Establish Records Systems at Startup for Long-term Success

Keeping records is a critical part of running a business correctly. Effective entrepreneurs develop internal systems to organize all financial information. For many businesses, the internal systems start and stop with an accounting software and box of receipts, but it is also important to keep all paperwork organized and accessible.

Keeping good records of all business transactions helps you create accurate financial statements to assess the health of your business. Inaccurate records make planning pointless because there is no way to gauge your progress. Should you need to borrow for growth or plan to sell your business down the road, accurate records are an absolute must. If you allow errors in your accounting system, you will end up spending hundreds, if not thousands, of dollars to have an accountant find the mistakes and correct them before a banker or buyer will even talk to you.

You also need to keep good records to minimize your tax burden. Whether your business is taxed at the entity level or your profits flow through to the owners, managing your tax liability is a year-round effort. Receipts should be entered into the accounting system, marked with any missing information, and filed such that any particular receipt can be retrieved within a minute or two. The filing specifics are up to you -- filing by business name, product type, date, or any other particular will work, as long as you can find what you are looking for when you need it.

Recordkeeping is made much easier through small business accounting software. Every business needs to use one of these programs. The free download versions are very basic -- useful only for very small businesses with very few transactions. The best option for any startup with plans for growth is Peachtree Accounting. Peachtree is a better option than the ever-popular Quickbooks for many reasons, but the most important is that Peachtree is entirely GAAP compliant. That is, the way the system works and the way your entries are posted meet the standards of the Generally Accepted Accounting Principles. GAAP compliance means your financial statements will accurately reflect what is going on with your venture, and, as long as you set it up correctly and review all error messages, your financial statements will require far less work to be presentable to bankers.

Paper records such as receipts, contracts, deeds, and purchase orders, should be kept in an organized fashion. In the spirit of "going green" and preserving work space, you might consider purchasing an electronic storage system for all paper transactions. These programs allow you to scan in the document, add labels and notes, and file in electronic folders for safekeeping. If you choose the electronic route, be sure you have TWO backup systems in place, at least one of which is online. If your office should be completely destroyed, an online backup service will save your business.

The amount of time you need to hold on to business records depends on several factors. The IRS requires a 3-year history of any document used to support an accurate tax return. However, if you are audited for suspected fraud, the IRS can look back at least 6 years. If you file a "bad debt" deduction, those records must be kept for seven years. In addition, your insurance company or creditors may require you to maintain documentation even longer. If you opt for electronic storage, holding the records is no problem. If you keep paper files or 3-ring binders, place everything over three years old in storage, but be sure the boxes are clearly labeled and kept in a safe, dry place.

When you are just starting your business, establish good systems for keeping records. Buy and install your accounting software early in the process, and decide on a filing system that will work best for you. Keeping records is a critical aspect of business success and it deserves your ongoing attention.

Related Articles
  Improve Workflow at Your Practice with Electronic Medical Records
  Passive-Aggressive Behavior Is Useless In A Startup
  StartUp Costs
  Call Accounting and PMS Interfaces
  INDIAN LEADERSHIP SHOULD FOCUS ON…..
  Finance Start-Up
  Fantastic Post By Calacanis On How To Get PR
  The Startup Visa Act of 2011
  Massachusetts Enacts Legislation To Protect Personal Information
  How Long Do You Need To Keep Your Business Records?
  How Do You Get a Trademark?
  How To Find A Top Internet Startup Business
  Never Dive Into Business Without A Startup Plan
  Questions You MUST Ask Before You Appoint A Bookkeeper
  Bookkeeping for your small Business I
  Five Steps to Startup Success
  A Home Business Franchise Essential--Making A Budget
  Have You Backed Up Today
  Financial Fundamentals
  Breakeven Analysis

Article Tags: Business records, business startup, Starting a business, stepbystep startup



Related Forum Posts
Re: Business 2012 in London - [quote="bjsteele":wu04qnmy]I don't know Richard Branson. Could you introduce him simply? What is he speaking about?[/quote:wu04qnmy] You were asking who Richard Branson is, well after a few false starts his first successful business venture was producing a magazine called ‘student’ which he launched in 1968. He then started selling records by mail order in 1970 before opening his own record shop in Oxford Street in 1971. He then opened the Virgin recording studio in 1972 followed by his own Virgin Records label in 1973 and the rest is history. He is the founder and inspiration for all things Virgin now such as Virgin Telecoms, Virgin Atlantic Airline, Virgin Records, Virgin Racing, Virgin Bank and Building Society amongst many others here and abroad and I would like to get to London to meet him and listen to what he has to say. Sir Richard Branson as he is now has been drafted in as one of several ambassadors to bolster Britain's image abroad. The initiative will be launched across 17 key cities, including LA, Tokyo, Beijing and Sydney, with events including a show in Rio during which images of Britain will be beamed onto Sugarloaf Mountain. regards, Mal.
Re: THE SECRET TO SUCCESS IS ALL IN YOUR HEAD...RIGHT NOW!!! - Success = Thinking (Head) + Heart (Feeling / Interest) + Hand (doing/ action). Success - H3 Robert
CMS - Speaking of Content Management Systems, which one are you going with? I've stubbornly held off going to a CMS, but each time I change something on my pages, such as the Navbar, I have to go back through everyone and cut and paste and it does get time consuming. BUt I like the freedom to alter a single pages layout if I need to to accomodate a certain type of article...
Interview Questions - Hi Shri, I have a series of interviews with fast growing entrepreneurs on my website for startup entrepreneurs. It's called If I Were A Startup... I ask each entrepreneur 4 questions: 1) How did the company get started? 2) What advice do you have for new startup entrepreneurs? 3) What mistakes did you make that you would advice others to avoid? 4) If you were starting a new business in a different industry what would it be? These 4 questions tend to generate a lot of discussion and from their responses I'll ask more probing questions. Hope this helps!
Re: 3 Steps To Startup Success - Emma's point about a website is a good one. One thing anybody who wants to start a business can do is set up a website. You can do this before you start your business, while still working in a regular job. Your website doesn't even have to sell anything at this stage (although I'd recommend that you monetize it using Google Adwords, Amazon, affiliate products etc)... Use your website as a kind of online resource centre where you can put together your ideas and build a knowledge base about the business and market niche you want to get into. Write articles about the business, products, problems people face. By doing this you will: 1. Have a place where you can focus and develop your thinking about your business idea. 2. Build an online presence NOW that will greatly assist you in marketing your business when you are ready to set it up. 3. Establish your reputation as an expert in your field before you set up your business. 4. Give you an outlet to test your business ideas before you take the plunge... Good luck! DH


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

When Living the Dream isn't enough!

WHAT IS MANAGEMENT CONSULTING

Work Life Balance: Adding White Space

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.