Maintaining relevant records would help you in tracking your small business’ growth, preparing financial statements, monitoring deductibles, identifying income sources, and preparing your tax returns to name a few. However, did you know that you don’t have to keep every single piece of paperwork?
Which Records Should I Keep?
In general, the records you must keep would be based on your location, industry, and specific business type. To start, the IRS, Internal Revenue Service, suggests that you keep these records, whether digitized or printed out, handy:
- Business Documents: These include records that establish your legal right to operate a business, like tax and business permits, as well as articles of incorporation and related by-laws, etc.
- Business Contracts: These prove your obligations to clients or customers, vendors, and suppliers, such as purchase orders and invoices, etc. as well as to your employees, like their payroll and benefits packages, etc.
- Financial Records: These show your business’ financial dealings like tax filings, payroll records, accounts receivable, and accounts payable, among others.
- Legal Compliance: Paperwork that shows your business has satisfied regulatory and legal requirements.
- Executive Decisions: Documents that demonstrate how you made business decisions and honored your commitments, such as yearly reports, company safety and health paperwork, relevant meeting actions and minutes, and dividend records.
Which Records Should I Toss?
To answer this question, determine if you need certain records to run your business efficiently and answer these follow-up questions:
- Do your business decisions and transactions depend on the information included in certain documents?
- Have you satisfied all statutory and regulatory requirements for maintaining the pertinent information?
- Is your business involved in any statutory or regulatory arrangements that require you to keep certain information for much longer as dictated by relevant policies?
- Is your company involved in a lawsuit that requires you keep certain information while litigation is ongoing? If not, you shouldn’t keep the information longer than you’re required to avoid potential accusations of discriminatory disposition.
The Main Takeaway
Your records tell your business story and help push your business forward. You need to invest in a solid plan to ensure their safety and availability. You could consider automating time-consuming and tedious processes like PO management, with vendors like SourceDay. Lastly, make sure that take the necessary steps to safeguard personally identifiable and confidential information.