It is essential in all businesses to keep good records. It is especially important for a home based business. Keeping good records throughout the year can save you money on taxes and it can save your sanity at tax time. You can make your home business more efficient by following these 5 tips that will allow you to have accurate, easy to access records, saving you time and attention.
Devise a System for Organizing and Storing Papers
The foundation to good record keeping for your home business is having a filing system for your papers. The system can be organized by date, by type of expense or whatever other setup you want. The most important thing is that you have, and use, a system.
You can use any type of container you want to hold your filing system. A filing cabinet can really help avoid clutter. A desk drawer with dividers would also work well.
Keep Hard Copies of All Digital Receipts
While it may be easier to file all of your digital receipts on your computer, this is not always a wise choice. Computers can crash, and lose your home business receipts and records. Whenever you book a flight, print out your flight receipt. Anytime you make a business-related purchase online, print out the receipt right then and there.
Get in the habit of printing all of your receipts from online business. Doing it right away means you don’t have to go receipt-hunting later.
Designate a Time to Organize Your Records
Even the most organized work at home business person needs to stay on top of their records. You can’t just wait until the end of the year to organize all of your records.
It is best to set aside some time once or twice each month, to go through all your receipts and other records and make sure everything is properly filed. You will also need to enter these expenses into your bookkeeping program. Little tasks can pile up quickly if you don’t have a set time to deal with them.
Keep Essential Papers in One Place
You do not want to find yourself in a situation where you have misplaced an important paper. Papers like W-2s, DBAs, FIDs, NDAs, assignment of IPs, accounts payables and sales records should all be kept in one place together. You should also have a set in an offsite back-up location as well.
Home businesses that get their employee’s W-2 or 1099 when they first sign on and then have to ask for it again later on because they lost it, often end up looking unprofessional to their staff. Even worse, if the papers for a staff member who’s left can’t be found, you run the risk of not being able to write off their expenses.
Outsource Your Record Keeping
If you are earning more than $20 or $30 an hour with your home business, it’s probably time to outsource your record keeping.
Bookkeeping is an important task that needs to be done, but it’s not a rare skill. You should be able to hire someone for $20 an hour to take over the task for you. This will allow you to focus your attention on generating money and managing other aspects of your home business.
Use these five record keeping keeps to get your home business organized this year. They will provide a foundation to help make your life easier and your home business more profitable.




