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What business records should i keep

Poor record keeping has kept many-a-small business from acquiring funding and other opportunities. Your word that business is doing great, stands no chance when it is not backed up by actual numbers. In most cases, because they are a one man show, many small business owners do not feel the need to keep proper records. At best, many simply keep track of the cash.... and that's about it. This article will answer the question- what business records should I keep?

Most of us dream of starting and running our own businesses. Many however are thrust into the world of business without a clue what to do and how to do it. I hope this will shed some more light and help you identify the necessary records for your business to keep.

The failure to keep a decent set of records could badly damage any business. We therefore need to understand the costs of not keeping business records.

THE COSTS OF NOT KEEPING BUSINESS RECORDS

Not keeping decent business records disadvantages your business in the following way:

1. No tangible proof of your operational track record. Many banks, lenders and investors require this information.
2. You miss out on critical decision making information.
3. You expose yourself to fraud and other business threats.
4. Conflict when memory fails and you resort to "he say-she say" to resolve matters
5. Inefficiencies that result from operating without sufficient information.
6. Weak client relations.
7. No basis for making future decisions. 
8. Weak legacy and historical record.

One of the greatest takeaways I got from my mentor some years back, was:

"Let the numbers speak for themself. You do not have to explain."

What this means is, if someone owes you money, have it on record. Have it in writing that they owe you. Get witnesses and additional documents like their proof of residence. When a transaction is made, have it documented in as much detail as possible so that even in your absence, the documents easily make sense to whoever views them.

This means the date, details, price, quantity, person responsible, time and any relevant information. Your company policies should not be ambiguous and employees should confirm their acknowledgement in writing. 

I generally discourage small businesses from starting off with fully fledged systems. Your business should guide you and tell you what records are to be kept. 

Do not keep records for the sake of it.

Let them become a strategic part of your business and eventually a competitive advantage. For example, instead of just recording a simple sale, you can structure your records to include a follow up. 

WHAT BUSINESS RECORDS SHOULD I KEEP

Depending on your type of business, the records to be kept will vary from one organization to the next. Some of the common records are:

• Accounting and book keeping records
• Bank records 
• Contractual agreements, permits and licenses
• Company records 
• Correspondence
• Employee records
• Forms
• Intellectual property
• Marketing and advertising records 
• Stock records
• Tax records


Record keeping checklist infographic


SHOULD I KEEP ELECTRONIC OR PHYSICAL RECORDS?

The trend nowadays is leaning towards paperless records, but I would recommend a combination of both. If you are maintaining online records, make sure that the security is tight and you have back ups. An easy way is saving documents in your google drive. 

Using your mobile device you can record transactions on the go and back them up on the cloud. There are a number of online accounting tools that one can use. The Business Builder App comes with a number of record keeping tools. In addition to the milestones and daily progress, you can create quotations, invoices, receipts, record cash transactions as well as information about various stakeholders such as customers, employees, strategic partners and more. You can download the Business Builder App here: 


As always, I wish you happiness, health and wealth. Till next time

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