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The Key to Having Everything You Need When You Need It

If you are going to successfully run a business, having good business records is a must. You need to have accurate records to prove that you can legally operate your business, you have paid your taxes, you have paid your suppliers, you can collect on invoices from people who owe you money, and more. Maintaining business records in an organized manner will help you find or verify information quickly and easily.

Organizing your personal and business records is easy and doesn’t take much time if you regularly maintain your files. You don’t need to buy a new file cabinet or two. As you set up your files, all you need is a couple of boxes and some file folders to track and store your information. As your business grows and is making money, then you may want to purchase a file cabinet.

Because your business and personal finances, bank accounts and credit cards are separate, you should organize your business and personal files separately. It takes hours to untangle a mess if you mix your personal and businesses expenses. This is time you could be spending more productively working on your business.

To begin, set up a business box with 80 file folders and a personal box with 50 file folders. Businesses are required to keep certain records for a period of time. Publication 583 from the IRS called “Starting a Business and Keeping Records” can help you determine how long to keep your records. You can find this publication at You should also talk to your CPA to find out how long to keep business records.

Items for Your Business Box

Set-up business files

  • One folder for business tax documents. Start a new file each year. Do not throw out the old file. This information needs to be kept indefinitely.
  • One folder for business insurance records. Start a new file each year. Do not throw out the old file. This information should be kept for three years; ask your insurance company how long they recommend you keep insurance records.
  • One folder for all licenses and permits based on your type of business. Keep this information permanently.
  • One folder for legal matters. Keep this file indefinitely.
  • One folder for copyrights, patents, and trademarks, if applicable. Keep this information permanently.

Operating business files
(Note: A bill is paid to a vendor or business. An invoice is what you send a customer.)

  • 12 folders for bank statements for your business only. Use one folder for each month. Each year, you will create 12 new folders. Do not throw out last year’s records. You need to keep bank statements for 10 years.
  • One folder of unpaid bills — bills you need to pay for the business from vendors/suppliers
  • 26 folders of paid bills. You need a folder for each letter of the alphabet. You will file paid bills alphabetically by the vendor/supplier name. All vendors whose names start with “A” go in the “A Paid Bills” file, vendors whose names start with “B” go in the “B Paid Bills” file, and so on. Each year, you will create 26 new folders. Do not throw out last year’s records. You will need to keep this information for a minimum of seven years.
  • One folder for unpaid customer invoices you have mailed or e-mailed.
  • 26 folders for all paid and collected invoices from customers. You will have one for each letter of the alphabet. Customers whose business names start with “A” go in the “A Paid Invoices” file, and so on. Each year, you will create 26 new folders. Do not throw out last year’s records. You will need to keep this information for a minimum of seven years.
  • One folder for your business credit card. Create a new folder each year. Keep this file for a minimum of seven years.
  • One folder for your business loan. Keep this folder for seven years after your business loan is repaid.
  • One folder for advertising: Logos, clippings, etc.
  • One folder for any lease agreements. Keep this folder for seven years after your lease is fulfilled.
  • One folder for communication services: Telephones, Internet, cell phones, etc. Keep contracts separate from bills. The bills will be filed in the paid bills file after you have paid them.
  • One folder for your business plan. Each time you update your business plan, put a date on it. Keep one copy each time you update your business plan.

Items for Your Personal Box

  • 12 folders for your personal bank statements. Use one folder for each month. Start a new set of folders each year. This information should be kept permanently.
  • One file for unpaid personal bills.
  • 26 files for paid personal bills — one for every letter of the alphabet. Each year, start a new set of folders. Unless you need the information for taxes, keep this information for one year.
  • One file for personal tax information. You must keep tax information for a minimum of three years, but it is advisable to keep tax records for six years.
  • One file for home and property records. Keep these records as long as you own the property plus an additional three years.
  • One file for medical records. Keep this information for one year. If you claim medical expenses on your taxes, keep all supporting information as long as you keep your taxes.
  • One file for personal insurance policies.
  • One file for large purchases. Keep the receipts for as long as you own the item.
  • One file for automobile records. Keep this information for as long as you own the vehicle.
  • One file for warranties of purchases. Keep for as long as you keep the item.
  • One file for retirement information. Keep this information permanently.
  • One file for personal family records (birth certificates, Social Security cards, marriage licenses, wills, diplomas, etc.) Keep this information permanently.

The simpler the system you set up, the easier it will be to maintain.

Organization is one of the keys to success. Records need to be orderly, and there should be a place for everything and anything regarding your business. When a supplier calls and says you owe him money when you know you have paid the bill in full, you need to be able to find the paperwork you need to prove you paid the bill. The same is true when a customer calls and says he has paid a bill in full but you know you haven’t been paid; you must be able to find the records to prove it.

Depending on your type of business, you may want to consider simple accounting software. If you are going to purchase accounting software, you need to learn how to use or pay someone to enter your information in it. If you keep your records on your computer up to date you can, at any time, know exactly how your business is doing financially. Be sure to back up your files; in case of a computer crash or catastrophe, and to be sure you have accurate copies of your financial records.

Phone and Internet Service

You will need to call the telephone company and get a business line and Internet access hooked up at your new office. It is probably not necessary to have more than one line at the beginning, but as time goes on, you may need to add another line. You could get the call waiting feature, which actually gives you another line with a minimal additional fee. Many phone companies now provide bundled services, offering phone and Internet service for one rate, and some have phone and Internet packages specifically for small businesses. Compare what the companies in your area offer so you can find the most efficient, affordable deal for your business. Be sure to carefully read the details of any contract you agree to for phone and Internet service; the introductory rate you pay when you sign up for service might only last six months to a year. Be sure you know what you’ll be paying when that rate expires.

You will probably want a cell phone, as well. Many cell phone providers offer services specifically for small businesses. Contact the cell phone providers in your area and compare their plans, again reading the details of any contract before you sign. In addition to finding a good price for service, find out how long you are obligated to keep service with that provider. Depending on the terms of the deal, some companies may require you to sign up for a one-year or two-year contract with them, and you may face large fees if you terminate your service early.

Setting up Your Office

Your office needs to be set up with everything in place before you open your doors for business. You need to be organized from the beginning. Your customers and vendors will notice immediately how organized you are when they start asking for things, and you should know exactly where to get the supplies or information they need.

You will need office equipment and office supplies. Lists of office equipment and office supplies are included in this chapter. The equipment list is organized in the suggested order of purchase. As a new business, it is not necessary to buy everything right away.

Invest wisely in supplies when you are starting your business. Don’t buy expensive furniture or equipment right away. Buy it as cash flow allows. Be selective and look for bargains. You may be able to find attractive furniture at affordable prices at second-hand stores or the scratch-and-dent section of office furniture stores. When you want to upgrade your equipment, save until you can buy exactly what you want and pay cash when you have saved enough.

When shopping for office supplies, buy basics in small quantities at first. Large quantities of office supplies are cash on the shelf. Put your cash in the bank instead, rather than investing in more supplies than you may need right away. Buy only what you need to get by until cash flow permits.

If ordering printed materials, save money by ordering black and white for everyday use. If you have computer software, you may be able to print documents such as invoices, statements, credit memos and purchase orders yourself on plain white paper. When these documents have been processed, they just get filed. Before they even make it into your file folders, they will be shuffled from one desk to another, scribbled on, stamped on and stapled to other items, so they do not need to be expensive or elaborate.

Office Equipment List

Your major office equipment purchases will include the following:

Telephone/answering machine
computer and printer/copier
desk and chair
four-drawer file cabinet
fax machine

Office Supplies List

Some suggestions of items you will need.

1 telephone book
1 desktop calendar or daily planner
1 card filing system to record names, address, telephone numbers, either paper or electronic
1 stapler
1 box staples
1 staple puller
1 roll tape
1 small pair scissors
6 medium-point black ink pens
2 medium point red ink pens
12 No.2 lead pencils
2 boxes small paper clips
1 box jumbo paper clips
1 yellow highlighter pen
1-1/2” ruler
1 letter opener
3 8-1/2” X 11” scratch pads with lines
2 file trays
1 wastebasket
1 telephone message book / duplicate
1 ream plain copier paper
1 box No.10 envelopes
1 roll postage stamps

Managing Your Time

Organization is a key to staying in control of your business, but you also need to stay in control of your time. To accomplish all the things you want and need to get done, you will need to manage your time and your schedule. Some people buy expensive planners or software to help them manage their schedules. The easiest way to manage your time is to make lists. It is important to have these lists with you at all times. You can either keep them in an electronic device you already have, such as a BlackBerry, or in an appointment calendar. Keep your schedule with you at all times. At your business, keep it close to your phone. At home, keep it close to your phone. When you are mobile, keep your schedule with you. Get phone numbers for every person with whom you make an appointment so you can call in case of delays or problems.

Prioritizing time and tasks is essential. You have to determine what has to be done today and what can wait. As a business owner, you will have lists of tasks that must be done daily, weekly, and monthly. There will also be tasks that occur once a quarter.

Start with a list of all the things that you need to accomplish. This is your monthly list. Then, decide what tasks must be done this week. Take the weekly list and determine which items you need to accomplish today. There will always be many tasks that need your attention. You have to determine whether they will help you accomplish your goals, or if they could be delegated to someone else.

Your schedule each day is based on your daily list of things to accomplish. Plan the amount of time you will spend on each task. You need to transfer your daily list into your daily planner — electronic or hand written. If planning your schedule on paper, use pencil so you can modify your schedule. For example, if you have an appointment with your accountant at 10 a.m. and you expect it to last for one hour, setting aside only one hour in your schedule would not be realistic. You need to block out preparation time, driving time, meeting time, driving back time, and follow-up time when you return. A simple one-hour meeting could easily take two hours or more, depending on your preparation time and commute time.

You will also need to block out time for your routine activities and lunch. Overscheduling can create a tremendous amount of stress. Careful planning and documentation allows to you plan your day in advance — and adjust as necessary for unexpected demands on your time. For example, other people will have tasks or requests that need your attention. You have to decide whether those tasks and requests are priorities, and fit them into your schedule if necessary. You should let others know that they need to schedule appointments with you at least a day or more in advance.

Never be late for an appointment, fail to meet a deadline or fail to follow up on something you promise to do. Communicate with your clients, employees and vendors if you promise something you are unable to deliver. You could face late charges, extra fees, and unhappy or lost clients if you fail to keep your word and don’t communicate.

You need to control your schedule. If someone drops something off and wants it done right now, you need to determine whether or not you can do it or if it is something that needs to wait. What will happen if you postpone your other tasks to accomplish what someone else wants done right now? Remember that time is money. Which tasks will help you make money? Which will cost you money if you delay them? Although you must be willing to modify your schedule as needed, don’t delay the important tasks that really must be done today for the good of your business.

Check off items on your list as you accomplish them. If you are unable to complete a priority task today, it will be at the top of your list for tomorrow. If there were lower priority items you were unable to accomplish, they too need to be transferred into tomorrow’s schedule and if not tomorrow, next week.

Time management is a discipline. Without this discipline, it is highly unlikely you will be successful as a business owner. While this may sound harsh, it is a reality. If you watch successful business people, you will see that they each have a schedule and a list of things they intend to accomplish during the day.

“The ability to concentrate and use time well is everything.” - Lee Iococca, former Chrysler Corporation President and Chief Executive Officer

Action Steps

To Do
  • Make a list of equipment and supplies you need at first for your business.
  • Set up your files.
  • Set up your office.
  • Research phone and Internet providers and arrange to get service.
  • Buy an electronic organizer or appointment calendar
  • Make lists to keep track of tasks that must be done daily, weekly, monthly and quarterly.

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