Happy Holidays!

The year is winding down and things are "wrapping up", so we want to wish you a wonderful holiday time with your friends and family. We also want to take this time to thank you for all your comments and support. Hope the holiday season brings you joy and happiness! Happy Holidays! - CT

Green Tip - Lighten Up

To save on lighting, consider using compact fluorescent lightbulbs (CFLs). They cost a little more than regular bulbs, but in the long run CFLs can last up to 10 times longer than the tradition lightbulbs. To save a little more, try installing dimmer switches and timers to lower your electric bill inside and out. You'll not only be saving money but goin green, so lighten up. - CT

Record Keeping

When developing a record keeping system, your goal should be to keep it as simple as possible. The records you keep should have a direct bearing on your small business and should be both comprehensive and easily understandable. Keep your records up-to-date in a manner that is uniform throughout the system.

Why should you keep records of your business operations? Two reasons, first they are required by law and secondly they will give you a full picture of your small business venture at any given time. It will also help to identify and correct any cash flow problems before they become major issues. Regardless of the type of system you use, the records must be accurate, complete and permanent.

There are four basis types of records that you will have and must track; sales records, cash receipts, cash disbursements and any open accounts receivable:

Sales records will include any income from the sale of your products or services you may provide. These can be grouped together or into separate sub groups so you can monitor what areas are doing better than others.

Cash receipts equal any monies generated by cash sales and the collection of accounts receivable. In a cash and carry small business your cash receipts will match your sales records.

Cash disbursements are your operating expenses or accounts payable disbursements. All disbursements should be done by either check or a business credit card and make sure they are well documented for tax purposes. Personally, I prefer a business credit card because typically all the expenses are itemized and I only have to write one check at the end of the month. And by paying timely I do not pay any interest so I am using and floating their money for 30 days.

An important note: this business card should “only” be used for business purposes…do not mix business expenses with personal expenses and keep a mental note of your running monthly tab. There’s nothing more discouraging than spending more than your sales for the month and being in the red. Your goal is to always be in the black!

If you must pay cash for something, always ask and keep your receipt. Put a comment on the back of the receipt of what the expense was for and for what reason. A small $25 or $50 petty cash drawer is helpful for these small cash expenses. Maintain good records as well for these expenses by listing the date the item purchased, the amount and why the item was purchased and balance it at least monthly.

Accounts receivable are sales from the extension of credit. Keep monthly records of any outstanding balances. If your customer becomes more than 60 days past due you will need to start following up on these accounts to make sure you receive your payments timely (I will cover collection activities in another article down the road.)

Keep all your expenses and records filed in an orderly manner and stored in a safe place. Every month you should reconcile your checkbook with your bank statement and make any necessary adjustments immediately. These supporting records should typically be kept for three years and you should keep your federal income tax returns forever. As always check with your professional accountant for expert assistance. - CT