Without keeping track of how your business uses money, it is impossible to grow the company and achieve a decent amount of success. Staying aware of inflow, outflows, expenditure and revenue is key to understanding how to position your business.
Whether its gaining insight into inventory management or staying cash flow positive, keeping records of everything is very useful to you and your business. That said, all documents are not equal. If you don’t track some things or have certain documents, your business may not be doomed for certain. However, there are some documents and business records that are a MUST.
We’ve laid out three of them below:
– Accounting records
Accounting records track your businesses transaction: income, expenses and equity. It basically shows you your businesses’ financial health. These records measure your company’s profitability over time, look at patterns in your records to help make decisions, and see if you have enough capital to cover your expenses. All of this may seem like hard work but technology has made it all easier with different apps that let you track and enter accounting record on your phone. There are also lots of accounting software that you can use to make all this bit more intuitive and less of a hassle.
– Permits and licenses
This is key especially if your business involves manufacturing or anything that people put in/on their bodies. Depending on where your business is located, the nature of your business and a host of other factors, there may be permits and licenses that you need to acquire before you can offer certain services or products to the public. If you don’t have these documents, your business could be shut down and all your goods seized. You also risk potentially heavy fines and even prison time! Do your research and get whatever permits and/or licenses you need, save yourself future trouble.
– Bank statements
Bank statements contain information about all your transactions with the bank. Not only do bank statements help with your accounting records, they also help you when it comes to taxes. With your bank statement, you can easily verify your accounting records to ensure that there are no discrepancies. If you have employees that handle financial transactions, this is especially important to you.
These three documents listed above are critical to the growth and success of any business, especially a small business. You don’t have to have everything on day one, of course. You can gather them as you go along (if it’s like a side hustle, for example). That said, it’s just better if you have them all before you even start. You’ll have peace of mind. There are also things like insurance and other legal documents that you may need (depending on the nature and location of your business) so be sure to stay aware.
As always, when you win, we win. To the moon!