Recordkeeping

Now that you're in business, it is critical that you maintain complete and orderly records. You will need to provide copies of your company documents to banks and other institutions with whom you want to do business. You will need to provide your accountant/tax person with accurate and complete financial records they can use to help you.

If you know you're weak in the area or record keeping, put everything in a large envelope or folder and retain the services of someone right away for a short-term assignment to get you organized. Have them set up a simple system that you will use and USE IT! Don't wait until tax time. Tracking and planning your finances will be next to impossible without a system. Granted, it's a boring task, but not doing it could put your entire business at risk or cause to spend money unwisely.

You'll need to keep:

• Legal documents/business documents (business license, fictitious business name statement, partnership agreement, articles of incorporation or organization, resellers permit, documents recorded with your state
• Banking information (statements, etc.)
• Unpaid Invoices/Accounts Receivable
• Paid Invoices (revenue)
• Unpaid Bills/Accounts Payable
• Paid bill receipts
• Receipts for purchased items
• Current projects
• Employee files/payroll records
• Tax records

Accurate recordkeeping will save you lots of time and money when you get ready to file your income taxes. It will be invaluable if you are ever audited. If you can afford a part-time bookkeeper, hire one. Whether you maintain your own financial records or hire someone else, there are good, easy-to-use software packages that will organize information, track billing and expenses throughout the year and make it much easier for your accountant (or you) to prepare your income taxes. Be consistent and record, file and/or post entries regularly (monthly at least).

Make sure you review each month how your business is doing financially. Run a set of financial statements from your accounting package or have your bookkeeper/accountant prepare them for you. You need to know how profitable you are. At the beginning, during the start up phase, there may be more expenses than revenue, but in a consulting/services business, this phase should not last very long. Once you have invested in legal filings, business stationary, office supplies and the like, you'll be set for a while. If you continue to lose money over a long period of time, trim your expenses and network to build more revenue. Sounds simple, but it is the cornerstone to longevity.

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