Keeping records of your business transactions is not only necessary for taxation purposes, but also important in case of disputes or discrepancies. You’ll want to keep a record of each sale in an organized storage space, whether it be a filing cabinet or other physical storage option, or cloud-based storage service. Here are some tips for keeping track of your transactions.
1. Back Up Your Paper Documents
If you’re still printing invoices and receipts, you’ll likely have them stored in a physical location somewhere. This can be a potential hazard to those documents should a fire, flood, or other accident occur and leave them damaged or ruined.
Scanning your transactions and saving them on a physical hard drive or onto a cloud should be something every small business owner considers doing. Having backups can be absolutely essential in the event of an accidental mishap.
It’s best to scan your transaction receipts as they occur, rather than letting them pile up for months before addressing them. It’s safe to assume you’d rather spend your time elsewhere than in a room with thousands of papers that need to be scanned.
Dropbox is a cloud-based storage service that allows you up to 2GB of free storage space. This can be a great start for a small business, and a step toward going paperless. There are premium options as well, once you’ve surpassed the 2GB limit, but this probably won’t happen until your business begins to truly experience a growth spike.
2. Get Some Information From Your Clientele
Another way to track your business transactions is to ask customers for an email address. This serves a twofold purpose: it allows you to keep track of who buys what, thereby tailoring a monthly newsletter or promotional offer to the individual, and allows communication between you and the customer.
If you become familiar with your customer’s transactions, you can predict what they’ll be buying and even gain insight into what products or services they like the most. Good customer insight is essential when creating a marketing campaign or launching new products.
You can also provide customers with post-purchase surveys that inquire about their purchasing habits. You can ask questions like “when is the last time you shopped here?” or “how many purchases have you made with us in the last thirty days?”.
3. Use A POS App
Point of sales applications allow you to track every transaction you make throughout the day, storing information on the monetary value of the transaction and what items were purchased. This information is stored in your account and accessible at any time.
POS apps also track the tax you’ve collected on taxable goods, so you can remain within the parameters of tax laws.
Square POS systems offer a customizable interface, inventory management, and transaction tracking. You can review transactions and sales by date ranges, and keep track of your inventory right from the app.
Best of all, the app works with a tiny card reader that attaches to a phone or tablet, saving you the cost of traditional registers and offering the customers emailed receipt options. You can concentrate your employees on the sales floor rather than being attached to a register.
4. Use An Invoice Generator
If you want professional looking invoices, an invoice generator may be your best option. If you’re unfamiliar with drafting documents or graphic design, many invoice generators offer templates and customizable formats so you can create an invoice that’s custom to your brand.
The free invoice maker from Wave also includes a payment system, so you can send electronic invoices and receive payments directly from the app itself. You’ll receive a notification when the invoice has been paid, and receive your payment within two business days.
Professional invoices make your company look more organized, and providing a simple payment option means you’ll have fewer late or delinquent accounts.
5. Hire Outside Help
Once your business begins to generate a certain level of income, you may not be able to keep track of your transactions the way you want to. When this occurs, it may be time to consider hiring an outside firm to handle your finances.
Financial errors can create losses and taxation mistakes, which can make business operations much more difficult further down the line. Balancing the books isn’t for everyone, and that’s why specific occupations exist that specialize in only that.
When you begin looking for an outside firm or bookkeeper, be sure to make them aware of your expectations and your budget. Accounting can be a costly service, so only take as much help as you truly need to stay on track.
If your company is generating enough income, you can hire your own in-house bookkeeper to service your accounts. That way, the work stays within the company and no outside firm has access to your financials.
Careful Management Prevents Issues
When it comes to your business’ financials, planning ahead is the best practice. Know when you’re approaching your threshold for handling the financial aspect of your company on your own, and have a plan in place before you actually need help right away.
Tax penalties are not conducive to growth, and in fact, can cripple a small business before it gets off the ground. It is vital to make sure that your tax status is filed properly with the IRS, and that you’re aware of regulations such as state and local sales tax, and filing deadlines.