Record Keeping: Why It Is Important
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With the surge in new business and the corresponding surge in dying ones there are many factors you must pay attention to if you want to do well in the industry. One of those is keeping records and no matter how small your business is even if it's still a startup it is important that you keep record of everything. Everything means your employee record, tax documents, customer list, expenses, income all depending on the type of business you run. Documents containing receipts, details of payments, credit purchases, sales, liabilities and assets i.e everything. Keeping record is not just about how much you make on a daily or on a weekly basis but every transaction that happens in and outside your business.
Keeping record helps you keep track of your business progress. Every business has its goals and it's important that your business is making progress daily but you can only determine if your business is making progress by the records. Without records it would be really difficult to determine if your business is doing better than last month or last year and so make investment opportunities harder. With records you can determine which points your business didn't do well, what caused them, the products that are not selling, which are receiving criticism, which is selling better. That will help you come up with plans to move your business further.
It will also help you plan and decide how much should be put further into the business i.e your business strengths and weaknesses. Which aspects of the business needs more funding and investment to make them work better and produce more turn out. Helping you make better financial decisions and also help your business progress in all aspects. That way you won't be spending money on unnecessary items or promotions.
Keeping records also help you prepare your financial statements, by preparing your profit and loss statements as well as your balance sheets you'll be able to deal with loans and other financial issues easily. Making managing the business even easier unlike doing them out of the blue and getting lost among piles of undocumented transactions. Protecting your business incase of bank , audit or employee issues(like suits) with records they can be easily referred to and sorted out quickly so you don't loose money to hungry people or tarnish your image in the industry.
Incase of producers, records of your purchases help you determine the best prices for your products. By comparing records of your raw materials, production cost , packaging as well as other expenses incurred in the process of production. They also help you with your tax returns, so you don't get over taxed for unnecessary expenses. The benefits of record keeping are limitless only if you tap into it.