As we enter the new year, many people will begin to look back at their records from 2024 to analyze their financial position and begin to prepare for the upcoming tax season. If you have an effective and efficient recordkeeping system, this process can be smooth and straightforward; however, if you find yourself struggling with keeping good records, this process can be complicated.
One Size Doesn’t Fit All: Choose the Right System for You
There isn’t a one size fits all approach to record keeping. Some businesses may use advanced recordkeeping systems such as QuickBooks, Ambrook, or FarmRaise. Systems like these allow businesses to track their income, expenses, balance sheet, and inventory information all in one place. Other businesses may not need such an advanced system but would still prefer to keep records in a digital format. For this situation, a simple spreadsheet system in Microsoft Excel or Google Sheets may be a great option, and KCARD has templates for different enterprises that can be used to help you get started. Another option for those who may prefer not to keep records using technology would be a simple ledger book. Whatever system you choose, remember that they will only work if you’re actively inputting your financial data!
Make Time for Recordkeeping: Find a Routine That Works
Finding time to input financial data into your recordkeeping system is essential. If your business makes several transactions each day, you may find it best to enter your financial data into your recordkeeping system at the end of every week. If you only have a couple of transactions per week, you might be able to input data at the end of each month. It is important to find a time interval that works for you and makes it easy to accurately keep track of your records. Finding the right balance may require some trial and error, but this will help you develop a routine that allows you to make the best use of your time and not get behind with your recordkeeping.
Why Recordkeeping Matters: The Benefits You Can’t Ignore
You may ask yourself: why does recordkeeping matter? Recordkeeping is essential to analyze the financial health of a business. When you keep good records, you will have detailed overviews of income, cost of goods sold, operating expenses, assets, liabilities, and owners’ equity. This will allow you to calculate key financial rations that highlight how well or poor your business is doing. Financial records can help you manage your farm or business--”You can’t manage what you do not measure.”
Recordkeeping also helps you when tax season rolls around. All of your financial information is stored neatly in one place, and then, you won’t be scrambling to gather all of the data to meet deadlines. Recordkeeping is also important when it comes to applying for grants and loans. Lenders will want to see detailed records over a specific time period, often three or more years, before they approve a loan. Don’t forget about budgeting and forecasting, too. You can’t predict future growth if you aren’t tracking your current operations! With good recordkeeping practices, you can build a strong baseline of data that will allow you to make confident projections for the future.
How to Get Started with Recordkeeping
Do you have a recordkeeping system? If you don’t already have one, it’s time to find a system that works for your business. Whether it’s a digital tool or a paper ledger, there’s a solution for everyone.
Are you using your recordkeeping system effectively? Take a look at your current system. Could it be more efficient? Make small improvements to make recordkeeping easier and more effective.
Find the right time period to input financial data. Find a routine that works for you. Whether it’s weekly or monthly, make sure you’re regularly updating your records.
Monitor and evaluate your financial health. Don’t just track your data—use it! Analyzing your financials will give you valuable insights into your business’s performance.
If you’re not sure where to start or want to improve your recordkeeping, KCARD is here to lend a hand. From setting up QuickBooks to creating a custom spreadsheet system or even understanding financial metrics, we’ve got you covered. Contact us at (859) 550-3972 or email us at kcard@kcard.info. Let’s make 2025 your best year yet!