Areas to Control A-G

Control - Business Records

Your “Business Records"
One of the main reasons for the failure of a small business is due to poor record keeping. If you don’t keep accurate and up-to-date records of the financial transactions of your business you will not only be breaking the law by not complying with regulations required by the IRS, but you will also disadvantage yourself because you will fail to have an accurate picture of how your business is progressing. Good records will allow you to monitor how your business is operating from day to day, and take any action necessary to correct problems that become obvious.

Your System must have these 5 qualities
Regardless of the system that you finally develop, it is important for you to ensure that your record keeping system is:

  • Accurate – Make sure that the data collected is accurate.
  • Simple – Keep it as simple as possible so everyone can follow it.
  • Quick – It should enable you to obtain the information you require quickly if necessary.
  • Organised – Make sure it is clearly defined so it is easy to answer the questions of who, what, when, why and where.
  • Clear Trail – Make sure your system allows for a clear trail of transactions from the source documents right throughout the rest of your accounting system to final reports.

Always remember that the best recording system will be the simplest. It is the one that allows you to extract the information you need quickly and easily if you ever need it in a hurry.

All the vital Records you need to keep
A basic record keeping system should be one that is easy for everyone to understand and use. It must also be reliable and accurate and consistent if the information that it supplies is to be relied on.

A basic system will include the following types of records:

  • Records that record your cash in and cash out
  • Records that record all check and credit card transactions used in the business.
  • Records that record your sales
  • Records that record all costs.
  • Records that record people that you sell to and that owe you money
  • Records that record your purchases
  • Records that record all dealing with outside agents and consultants.
  • Records that the suppliers that you owe money to
  • Records that record your staff and the wages or salaries that they are paid
  • Records that records the small cash expenses that run through your petty cash system
  • Records that record your stock on hand and the various lead times for obtaining more
  • Records that record all your plant, equipment, machinery etc
  • Records that record all the assets and liabilities of the business
  • Records that enable Sales Tax and Tax to be easily calculated and paid.
  • Records that record the financial results of the business during any particular period
  • Records that enable the end of year financial accounts to be completed.