Ten (10) THINGS that must be RECORDED when running your Small Business

By: Kmar Henry
     CEO │ BIZcare Consultation & Accounting Firm

Throughout my tenure in small businesses, scrutiny as allowed me to pinpoint these aspects when doing business. It is of great concern since I have noticed, the lack of acknowledgement displayed when implementing systems to properly record these data that are deemed detrimental to the success of any particular small business. With this in mind, here are TEN (10) Things that must be properly recorded and maintained while running a small business: 

1.   Capital: This refers the money used to start your business. From that money, the assets are bought and any other purchases made at the start of your business. Everything should be recorded and properly stored to ensure proper tracking that helps to identify BREAK EVEN points and when you start making an actual PROFIT.

2.   Inventory: This should be done preferably by using the FIFO (First In First Out) or LIFO (Last In First Out) method pending on the nature of your business. It is important to know all your stock levels and quality to ensure that your business is running smoothly at all times, and to also ensure that you are on top of the inventory systems to minimise the spoilage capacity of your business. Business owners must ensure that an inventory check is done at least MONTHLY, to ensure that all inventory systems are properly maintained and secured. 

3.   Purchases: Includes all transactions done to replenish inventory and are directly related to the sales department of your business. They can also be noted as 'direct expenses' to businesses who offer a service. These items should be recorded daily with adequate storage for receipts in a safe place. 

4.   Sales: Is considered as revenue earned; monies received for goods or services, these monies should be recorded daily and kept in a safe place to be reviewed or retrieved after daily operations. 

5.   Expenses: All bills or receipts received as costs incurred from operations. These costs usually fall within the categories of rent, utilities, transportation, stationeries, employees, miscellaneous etc, and are usually incurred daily. All figures and receipts of such activities should be recorded and stored in a safe area. 

6.   Receivables: These are all payments owed to you by your debtors and can also include your suppliers or customers. These items are usually ignored by most small business proprietors because they are always heavily distracted by other things. It is essential that these items are recorded monthly and stored as they are also deemed very important towards the preparation of your balance sheet. 

7.   Payables: All outstanding amounts that are owed to your suppliers or creditors on a whole, or over a period of time. These amounts should be tracked and kept safely as they are also vital to the survival of your business, and also in the preparation of your balance sheet.

8.   Cash Balance: Whether at the beginning, during or ending of the year, these monies include both cash in ''hand or bank'' balances at the start or end of any given period. Remember the golden rule ''cash is king,'' thus knowing these balances are essential, being that they are prepared after all purchases and expenses are made. Hence, provides a route for either reshuffling things or retain funds and reinvest in the business. 

9.   Assets: As noted above at number (1), this includes all items bought that can be liquidated or resell at a profit at any given time. The purchasing cost and date of these items are inevitable; to ensure that their NBV (Net Book Value) is properly maintained and known before an asset depreciates.

10.   Loan Balance: Whether it is a short or long term loan, all balances and terms should be recorded and tracked monthly. The interest rate and repayment time should be always documented and at the tip of your lips as these aspects are deemed essential towards the income statement and balance sheet of your business.

To date, there are various software and apps such as Quick Books, CRE (Cash Register System), Great Plains etc that are now available to help business owners to properly maintain these important aspects. And also, there is always an Excel sheet that can be used effectively to prepare all these things. However, effort should be exerted in ensuring that a proper filing system is implemented to record all receipts within their respective categories to ensure that they can be easily retrieved at any given time. Ignoring these aspects will leave your business vulnerable to theft, spoilage, under or overestimated figures and improper audit. Thus making it super imperative for business owners to take the time necessary to meticulously track and maintain all these processes, by all means, being that you can also attract investors and assess loans easier from banks.

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Edited by: Xavier Campbell
              CEO │ Structural Creations

BIZcare Consultation & Accounting Firm is a consulting agency that operates within the small parish of Clarendon in the beautiful land of Jamaica. We are geared towards educating the minds of upcoming entrepreneurs of the important aspects that must be considered before starting their businesses. Hence why we operate under the slogan 'Your Business is OUR Priority' and tagline 'Helping Small Businesses & Individuals to better Organise their Business Functions.'

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