Commonly asked questions on how to tame the “Paper Dragon"
1. What does record keeping mean?
It means that you have a process that keeps records organized for optimal retrieval. For example, if you sell widgets, you need to keep track of the inventory, income, expenses and customer records. However, if you’re a home renovation contractor, you’re going to want to keep track of individual clients, bidding records, labor costs, and marketing expense.
2. What type of records should you keep?
Typical records are (but not limited to) the following:
- Customer records
- Sales records
- Financial records
Make a list of the different types of records your business will generate so that you can create a system that works.
3. How you determine what are personal and business records?
You need to identify what record is personal and tag it as such. The same is true for your business records. Keep a notebook with you all the time. As you go through your day, note each time a record is needed or created. Use those notes to determine the best way to keep those records organized.
4. Will I have to invest in an entirely new digital record system?
You may already have certain business software that keeps track of certain functions of your business, such as accounting and bookkeeping. This software might have additional “add-on” tools that will help everything to work seamlessly together.
Developing a record keeping system that works for you is like eating a watermelon. You cannot eat it without the seed. Record keeping is something that you will have to master eventually. But, it’s important to use a system that works for you, as well as meet all the legal requirements for your business according to the IRS and local taxing authorities.