This continues our 10-part series of best practices for business owners.
Best Practice 6: Establish the right filing system for your business
Every business is different, and while accounting rules are the same across all businesses, it is imperative that business have the ability to reference financial record keeping. Set up a system that is consistent and gives you the ability to understand what is happening in your business.
There are many ways to organize your financial record keeping. Some methods include:
- Monthly files to keep your bank statements, and any receipts or invoices. This is most simplistic filing system and should be used in smaller businesses because if you need to track down an issue or do research; it is less paperwork to sift through.
- Set up a file for each vendor and customer. This is the most common method to maintain your financial record keeping. Most businesses set up vendor files but not necessarily customer files; it really depends on the specific needs of your business.
Many businesses utilize both of these methods. For example, vendor and customer files as well as a monthly file to keep bank, credit card, and merchant statements. Again, it depends on the specific needs of your business.
Regardless of what method you choose, keeping accurate files keeps the clutter down and the business running smoothly.