Record Keeping


No matter how small or how big your business is, it is vitally important to keep accurate records. This may be the biggest failure of most small businesses and business owners.


First, it is very difficult to run a business if you don’t how much money you are making, what your expenses are, who owes you money and who you owe. In fact, it is impossible. If you are just starting your business, you have the opportunity to get it right the first time. If you have been up and running for a while, this is a good time to get organized.


Record keeping or bookkeeping, can be as simple or as complex as you like. It can be as simple as keeping a spreadsheet with a column for income, and other columns for various expenses. At the end of each month, just total the columns. This spreadsheet can double as your bank account register.


Speaking of which, it is highly recommended that personal and business accounts be separated. The easiest thing is to just get a separate bank account for your business and only deposit business income and write checks for business expenses on that account. You can then write a check to yourself on a regular basis and call it “Owners draw” or something similar to let you know that it was personal money taken out of the business. It is also a good idea to have a credit card that is used only for business use and another that is only for personal items. This is the most basic form of business book keeping.


Many people get along great with Excel or some sort of spreadsheet software. A better idea is to also invest in bookkeeping software such as QuickBooks. Quickbooks comes in a variety of versions for different types of businesses. Some people use it primarily to keep track of receivables - who owes them money. Others find the Payroll feature indispensable.


Whatever system you use, it must work for you. If you are ever audited or there is some question of your income and expenses, good records are your only defense.