Online business owners should know that keeping accurate and update records is absolutely imperative in order for their company to be a success. Keeping records of all of your financial transactions doesn’t have to be headache-inducing, either. There are a number of different programs that you can use to help gather and organize the information.
Should I Keep Daily Records?
Keeping daily records of your online business are the best thing that a business owner can do to guarantee its success. The first and most important part of keeping accurate records is that it will help you monitor your business’ progress. You can easily see:
- Whether your business is making you money
- Which items are selling and which are not
- Gross income for the day
You can use tools like Google Analytics (which is free) to help you determine which items are selling, and obtain other important information that can help you improve and optimize your website.
A good business owner will also want to prepare thorough financial statements. These statements should show your profit and loss income statements as well as your balance sheets which should include assets, liabilities, and equity. These statements are very important when ever you may be dealing with your bank and your creditors. They are also necessary when preparing your tax returns.
TIP: QuickBooks, a program designed by Intuit, is a great tool that is best for those who have small businesses. You require no formal accounting training, which is a huge plus for any. It also has a QuickBooks Point of Sale feature that can track inventory, sales and customer information.
Keeping up to date records will help you easily identify the source of your receipts. What is the reason this is important? A lot of small or online business owners begin muddling their personal expense receipts with their business receipts. With the right kind of programs, it will help you separate your business receipts from no-business receipts, as well as separate your taxable income from your non-taxable income.
Being able to recognize your deductive expenses is also that such programs will help you with. A lot of business owners often forget about all of the deductions that they could be making, but there are accounting programs out there that will help you with this, such as QuickBooks.
What Type Of Records Should Be Kept?
Depending on what country you reside, there may be different laws that state that particular records are required. Generally there are no special kinds of records required. You will need to keep certain supporting documents on hand, however, such as:
- Invoices & Receipts
- Cancelled checks
- Deposit slips
Businesses often forget about keeping a petty cash fund. This type of fund will allow you to make minimal payments without having to write out a check. It’s important that you keep a record of all money that is coming out of that fund. You can prepare a petty cash disbursement slip and attach it to your receipt.
Don’t forget about keeping track of your travel, transportation, gift and entertainment expenses that you may incur with your online business. You can then look at deducting them as a business expense.
TIP: If you need a program to help you with invoicing, one that is used by a lot of business owners is Freshbooks. Freshbooks will allow you to be paid immediately and you will no longer need to perform manual payment entry. It can also be integrated with 12 different payment gateways, including PayPal and iTransact. Invoices are created quickly and are professional, and you can immediately pull your tracked time and expenses into an invoice. Unless you are a fan of wasting time with Excel spreadsheets, then this type of program will save you significant amounts of time.
You need to keep regular records so that at the end of the year, you can determine the value of your inventory. In order to do this, you will need:
- Gross Receipts: These receipts show the income that you receive from your online business. You will want to retain supporting documents such as bank deposit slips, register tapes, invoices, credit card charge slips, receipt books, email records and your 1099-Misc forms.
- Purchases: This will show the different items that you have bought and then re-sold to customers. Your supporting documents should then show the amount that you paid for those purchases. Some of the documents you should retain are cash register tapes, credit card slips, cancelled checks, invoices, and email records.
TIP: It’s always a good idea to put your supporting documents in folders with separate categories. For example, if you are writing a receipt to someone who is selling office furniture, you should place the record of that expense into the “Office Supplies” folder.
How To Easily Keep Track Of Clients And Customers
If you happen to work with more than one client at a time, it can be quite confusing organizing records from them, especially email records. Rather than try to write it down on a piece of paper or keeping records in a basic Excel spreadsheet, you can choose one of the many online tools available to you. If you like CRM, then you can choose programs such as:
You can also choose to create individual files for each client either online or offline (though this can get a bit messy), or set up an address book for email that allows you to include a lot of additional information in the “Notes” area.
What it really comes down to is your preference. The system that you choose needs to be quite secure, as you will have all sorts of information about your clients that you will undoubtedly prefer to keep private. Customers don’t need to see what you have charged on an item previously, and your current customers and clients should not be viewing notes on how you dealt with previous problematic customers and clients.