Can you confidently say that your business’ records are properly organized? Whether you are running a small business or a large venture, maintaining organization is an essential part of the accounting process. This is an aspect that many businesses neglect and can be detrimental to your business’ success. Keeping your business records organized makes it easier for you to monitor your business’ progress, be better prepared for tax season and will ideally save you time and money. In this article we will layout an easy and effective way to organize your business records for proper accounting purposes. It will eventually help you avoid the negative consequences that can occur from disorganization.
The Accountants Way
What we suggest to all of our clients is to utilize a filing cabinet system to keep their business records. By breaking up and separating your various business records into a systematic filing system you can keep your records in an organized and accessible fashion. This organization should include three different filing cabinets which will be designated for certain records characterized by the information presented in each business record.
Clients and Contractors
But before you begin it is important for you to follow one rule when setting up your filing system and separating your records. You should make sure that you are separating everything by tax year. This way it will be easy to find a particular year’s records and help if issues that arise that require records from multiple years. With this in mind begin to organize your first cabinet by filing your client and or contractor business records. When you bundle all of your various client records all together you increase the likelihood of losing a critical record that you might need later on. By keeping each client in a separate folder you decrease the chances of loss and make it easier for you when it comes to retrieving a record.
Tax Related Accounting Forms
The next cabinet will be primarily used for your business tax records. Due to the amount of paperwork a business must utilize, it is important to keep all of these records in one place. Here you would separate your files according to the category such as income tax filings, w-9 forms, financial statements and audit reports. As stated earlier be sure to separate these documents by year, it will make finding them easier when needed. When tax season comes, you will fully appreciate this cabinet for the troubles it will help you avoid.
Business Operating Forms
As of your last cabinet, you will set it up is for documents such as property records, confidentiality agreements, non-disclosure agreements, patents, licenses and any other forms needed to operate your business. Just as you did for the other two cabinets determined a separating system to arrange your records in the third cabinet. These forms are just as important as the ones in the other two cabinets and maintaining organization of them is just as crucial.
Back Up Your System
Finally it is important that you backup all your records and forms into an electronic database. Hard copies of documents are always subject to various forms of damage such as fire or water that can completely destroy a business record. By saving all of your records to an electronic database and backing them up, you give yourself the ability to remake these hard copies if any damage occurs. Keeping two separate systems of records gives you the assurance of never losing any important document due to damage, technical failure or from shear time.
ABIP has licensed CPAs and bookkeepers who can help keep your records on track all year long. ABIP keeps you up-to-date and compliant throughout the year and can assist you with any accounting need you might need. See our General Accounting Services for more information or contact us today for help!