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Essentials For Your Small Business: Records

Updated on May 9, 2017

Slicing Up the Records Pie

Keep essential records in each of these categories to understand and control your business.
Keep essential records in each of these categories to understand and control your business. | Source

The Three Necessities

No matter how large or small, all businesses need to keep the same kinds of information. Don't panic: the simpler and small your business, the simpler the records you can keep. It's very much to your benefit to have good records: they will help you understand and control your business, not to mention keeping the tax man satisfied. You just need to track the essentials in each of these three information categories:

  • Management Information
  • Operations Information
  • Financial information

We’ll cover the basics of what kind of information each of these categories covers in this post. Details on organizing and maintaining these records will be covered in separate posts.

Category 1: Management Information

Management information records the plans for your business, how you present your business to the community and industry, and your interactions with customers, partners, and vendors. It should include your:

  • Business Plan: this is the foundation document for your business. It describes what you sell or make, what your business goals are, your strategy for achieving your goals, and your organization structure. It should also include a thorough analysis of your market, competitors, and why your product or service is competitive.
  • Brand Identity Definition: these are the official versions of your logo, company letterhead, envelopes, invoices, business cards, and any other items that represent your company.
  • Decision Data Base: although “decision data base” is the conventional name for these records, they can be as simple as pages in a notebook. The decision data base records the important decisions that effect how you do business. It’s not just big companies that need such records: even if you are the only worker in your business, if you write things down, it’s one less thing to try to remember. Believe me, you will have plenty of use for the spare brain cells.
  • Correspondence: file any letters that you receive or send, as well as any e-mail or phone logs regarding any important topic, such as disputes with vendors, agreements with partners, or requests from customers.
  • And while we’re at it, make a habit of logging important phone calls. Microsoft Outlook already provides a form for doing this, as do many contact managers. If you are more comfortable with handwritten records, you can simply record the date, time, name of caller, topic discussed, and a summary of the conversation.
  • Contact List: this should include sections for your employees, customers, and vendors. Record preferred phone numbers, mailing addresses, and e-mail addresses.

Category 2: Operations Information

Operations Information records what you do and how you do it. It encompasses:

  • Policies: your company’s decisions about how everything works from timekeeping to donating to community causes. For instance, a lumberyard might have policies on Earning Vacation Time, Timekeeping, Safety, Discrimination etc.
  • Procedures: are the step-by-step processes for applying policies. For instance, your company might have a procedure for applying for vacation time, recording vacation days, cargo loading and how to report discrimination.
  • Compliance documents: these are the documents that are either legal requirements or accepted standards for your industry. A restaurant, for instance, will have to comply with applicable sections of public health code. A software development company might comply with CMMI standards or the Project Managment Institute’s PM-BOK.

Category 3: Financial Records

Financial records provide both summary and detailed information about your business transactions. This is the type of information that most of us call "keeping the books" or "keeping accounts." The IRS Publication 583, Starting a Business and Keeping Records, provides a very useful checklist of which records to keep and why. Here’s a short list of the minimum records you should keep for tax reporting and financial analysis purposes.

  • Gross Receipts
  • Purchases
  • Expenses
  • Employment taxes.
  • Travel, transportation, entertainment, and gift expenses
  • Assets


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