A company’s financial statements tell the story of a business. The income statement will provide you a story of the present-day state of affairs. The balance sheet provides you with a historical picture of the assets, liabilities, and equity over the lifespan of the business.
Record keeping, however, plays a significant role in providing the supporting details to paint the full picture of the story. Keep reading to learn more about why record keeping is so important to the success of your small business!
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Record Keeping Maintains Positive Client Relationships
To determine the success of a business at any given time, you must keep accurate and detailed records of the day-to-day transactions. All customer’s accounts receivables must be properly recorded. This will ensure that payments are collected and documented to the correct client’s accounts.
You must update and review your accounts receivable regularly to ensure that you properly state your income. Applying your customer’s payments correctly will ensure repeat business, maintaining positive client relationships!
Record Keeping Reduces the Risk of Fraudulent Transactions
A business must also record expense transactions in a timely manner to ensure that you only receive payment for an invoice one time. This will help to reduce the potential risk of fraudulent transactions. Unfortunately, fraudulent transactions often go unnoticed for years due to poor record keeping. This will cost your business valuable resources that you could otherwise use to grow your organization.
Record Keeping Helps Your Tax Situation
You must keep track of your tax-deductible expenses when they occur to maximize your ability to take advantage of any available tax breaks. It is wise to invest in a document scanner to maintain electronic copies of checks received and invoices paid for record retention.
You can save files with electronic storage applications such as Dropbox for efficiency. These programs also allow you to share documents with other members of your organization as needed.
Record Keeping Ensures IRS Compliance
It is vital to keep records for compliance regulations. The IRS requires businesses to maintain records for a minimum of 3 years. Your records will be used to validate the items reported on your tax returns in the event of an IRS audit. Without proper documentation, an IRS audit is not only highly stressful but also incredibly costly and time-consuming.
Record keeping is an important step in telling the story of your business. You must take the time and care necessary to ensure your business’s story is told correctly. Unfortunately, many small businesses do not have the time or resources to keep accurate and consistent records.
Outsourcing this area of your small business ensures that your records are accurate and complete at all times. This investment in your business could save you thousands of dollars in the long run!
LUXA Enterprises specializes in HR services, outsource accounting, bookkeeping, and payroll services. We match up with ideal candidates for services by allowing small to midsize businesses to increase focus on their growth through outsourcing. If you want to know how we can help you, contact us today!
REQUEST ONLINE PRESENTATION
We’ll demonstrate how you can save money while improving your efficiency and accuracy when you outsource your back office services to TEAM LUXA.
Let Us Present A Plan →
Call TEAM LUXA today at (918) 928-7288 to learn more about why outsourcing is right for you!