Paperwork, paperwork, paperwork. That’s the last thing you want to do when running your business.
Given that the IRS can audit your records for years in the future, it pays to have everything ready in case that happens. The question is, what do you need to keep track of?
Below are five types of business records that you need to keep track of.
1. Legal Documents
Your legal documents are what inform you of what your company is and how it’s structured. It’s essential to keep track of these in cases where you need to prove to anyone your company exists and what your role is in it.
This information will include the type of company you have, partnership documents, sales tax ID, and your EIN.
2. Insurance Documents
Running a business involves a lot of risks. If you don’t carry insurance, then you’re putting your entire company at risk. This means that you will likely have several types of coverage when you’re in business.
You need to be aware of what each of these types of insurance is for and how much coverage you have with each of them. Having quick access to these documents means you can handle problems quickly.
If you run a local business, then the chances are you need permits to operate. Your business permits will tell you how big your parking lot can be, the maximum size of your outdoor signs, what you can do to your building, and type of business you can operate.
Keeping your permits in order and on-hand means you don’t have to go hunting for them when someone asks. This can help keep your business running and not shut down until you find them.
4. Accounting Records
Cash flow rules all companies. This makes it vital to keep your accounting records in order. If you don’t know how much money is going in and out of your business, then you run the chance of running out of cash when you least expect it.
These records also include money sent out to your team members. Make sure to find more info about tracking payments to them and making sure your staff has all the information they need for their own records.
If you purchase any equipment for your business, then you need to keep an accurate account of everything you buy. Every year you need to account for the appreciation and depreciation of all your assets.
This matters when the time comes to sell old equipment. The profit or loss from your sale will have tax implications the next time you file.
Don’t Neglect Your Business Records
When much of your time is spent growing your business, it can be easy to start neglecting your business records. The problem is, this can get you in trouble. Make sure to keep track of everything happening in your business so you can keep yourself safe in the future.
Once you get your records in order, you can start focusing on your business again. Head to our business section to read our latest posts on the subject.