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Module 2: Recordkeeping

Common recordkeeping methods

You don’t have to start with a sophisticated recordkeeping process initially. Your system can grow with your business. In the beginning, recordkeeping may not require more than some manila folders and a file cabinet.

As you grow, you’ll find that you’ll want to systemize your recordkeeping so that it is easy to find the records you are looking for. This usually means some type of digital storage strategy, such as keeping files digitally on your computer or out on the cloud so that it’s accessible by others in your company.

But let’s start with the simplest and move through the different choices you have.


This is the place most businesses start. All you need are some file folders, perhaps hanging folders and a cabinet to store them in. This is a simple way to organize your files by customer, vendor or employee since you can add paper copies or records to the appropriate folder. If you need to look something up, you just have to find the folder by that name or number.

You may also want to consider creating a “tickler file” so you remember when taxes need to be paid, or licenses or insurance policies need to be renewed.

Computer Recordkeeping

Eventually, you will find paper a bit burdensome. As your business grows, so will the amount of paper and folders to keep track of. You will also come to realize that all those physical records can be lost in a flood or fire.

A computer system can simplify your recordkeeping greatly. First, digital records can be easily backed up, and duplicates kept off-site in case of a natural disaster. You can also scan all your paper records into the computer, creating a digital file system that mirrors your existing one, so you don’t have to start from scratch. Obviously, it’s easier to store the records too. As the years go by, dozens of banker’s boxes stacked around the warehouse or office can become a recordkeeping nightmare.

You’ll want to back up your records daily if possible, or at least weekly. A portable hard drive is the best way to back files up and only takes a few minutes. Alternately, you can store them out on the cloud so that they are accessible wherever you are day and night, without having to carry around a portable drive.

Cloud computing

The cloud sounds mysterious but isn’t. It’s basically a lot of computers stored in a giant warehouse. Instead of using up the limited storage space on your computer, you can use the virtually infinite space available in the cloud. Another advantage is that cloud files are regularly backed up, so you will never lose your files. Plus, you can pull up the records anytime, anywhere, even if you’re lying on a beach somewhere getting a nice suntan.

Best of all, there’s no software to purchase or upgrades to worry about.

Cloud Accounting
There are two ways to use the cloud. The first is to use it to do your bookkeeping. We’ve already covered this in Module 1: Financial Literacy. You can use a service such as QuickBooks or GoDaddy Bookkeeping to keep most of your records. They can usually generate invoices, track payments, and some even handle payroll. Best of all, your accountant can retrieve these files and reports at any time to file your taxes and run reports.

Cloud File Hosting
You’ve probably had that frustrating experience where your computer runs out of storage space. Well, the cloud is never full. You never have to worry about deciding which files you need to save and which ones to discard. You can always rent more space on the cloud. Some services let you have free storage up to a certain amount before charging you; others have set fees based on the amount of data you have stored.

Amazon offers several tiers of storage; some of it’s free. Microsoft’s OneDrive cloud storage has similar packages based on use and integrates seamlessly into your suite of Office products.