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basic financial planning #7: A place for everything

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Blog entry by BigTiny posted 03-09-2011 10:08 AM 1130 reads 0 times favorited 10 comments Add to Favorites Watch
« Part 6: Keeping it in its place Part 7 of basic financial planning series Part 8: know the tax codes »

Good evening group.
Today we look into record keeping among other things.

First and foremost, you must have a secure place to keep your records. A good filing cabinet is a great start. It should be a minimum of three drawers and four is better. Why not build one? They’re an easy build. I once did one with nothing but a Skill saw and a router. MDF covered in plastic wood grained laminate. Still have it some 29 years later and it still serves its purpose..

Organize your files! Keep your gas receipts separate from your wood receipts. Use file folders for each type and have one for each month. At the end of the month, put a new set in front of the old ones and total the old ones up for the past month, then enter the totals in your books. This way you don’t get caught in a mad scramble at tax time. It also helps with knowing where you are financially at any time. Remember to put your papers away every day! Don’t let the sun set with papers in your pocket!

Once you have done your books for the year, retire the file folders to a storage box labeled with the year and what you have in the box, such as “1999, receipts” or “1999, sales slips” etc. This way you can quickly lay your hands on any piece of important paper in moments. This can settle disputes with suppliers, customers, the car dealership’s repair shop or even the tax man.

Retain these files at least five years, more if you want, but never any less.

If a receipt isn’t clear as to what it is for, write that information on the receipt. Don’t trust your memory to be enough to keep track. (I know I’ve mentioned this before but it fits here too)

These files are like a history of your business, and as such are valuable information and should be treated as such.

Another important point, replacing these records in the case of their loss through fire, flood or other disaster would be well nigh impossible, so make backup copies. Use a scanner and transfer them to a computer CD-ROM disk. Store these disks AWAY from the business. Your home if there is no other option, although the safest place is a safety deposit box. They are quite inexpensive to rent, and the rent is tax deductible. A lot cheaper solution that having your accountant rebuild the records at his hourly rate.

Well, this should give you some basics of getting into the world of business. This is nowhere near a complete course on the subject, but remember, I have had to talk in generalities in light of this being a multi-national forum and what works in Rome doesn’t necessarily work in Carthage.

I may add another chapter or two to this blog if I come up with something general enough to be of interest to all.

Have a great today and a better tomorrow.

Paul

-- The nicer the nice, the higher the price!



10 comments so far

View Sheila Landry (scrollgirl)'s profile

Sheila Landry (scrollgirl)

7665 posts in 1578 days


#1 posted 03-09-2011 01:01 PM

Again, Paul – you are right on the money! (Pun intended!) I did do pretty well last year with keeping my receipts for just about everything and it made a world of difference in figuring things out this year. I don’t have all that many receipts because my business is small, so I have one of those 12 month accordion folders and I just put everything in there. I didn’t run totals after each month, but I do intend to do that this year and made up a little spread sheet each month as I go along. That will take the work out of doing it all at once the end of the year. I plan to dedicate one day per month as a day to do my books and stick to it. It really shouldn’t take me more than an hour – even less if I am organized, and it will make things much easier next year when I do my taxes. I have set up an alert from my Google Calendar to remind me every month. Sometimes that is all I need. :)

All your advice has been very helpful. No matter how busy we get, we need to take time to work on this part of our businesses. A little effort now will save a load of headaches later.

Thank you so much for taking the time to write this blog. I am sure that many people have benefited one way or another from it. I know I have.

Sheila :)

-- Designer/Artist/Teacher. Owner of Sheila Landry Designs (http://www.sheilalandrydesigns.com) Scroll saw, wood working and painting patterns and surfaces. "Knowledge is Power"

View Edwin's profile

Edwin

97 posts in 1656 days


#2 posted 03-09-2011 05:03 PM

Thank you Paul that’s good advice. I for one am not a good record keeper, just a cardboard box I kinda throw stuff that I think is important into it. As for your receipts if you leave them in your truck long enough they will fade and all you have is a blank piece and wonder what the @#$% is this from… Geez… Any way I will take your advice. Ed in Port Republic 08241

-- Ed Port Republic

View Div's profile

Div

1653 posts in 1599 days


#3 posted 03-09-2011 08:58 PM

Thanks for the blogs Paul! I am guilty of many things you mentioned but this series should get me motivated to do more!

-- Div @ the bottom end of Africa. "A woodworker's sharpest tool should be his mind."

View HorstPeter's profile

HorstPeter

117 posts in 1488 days


#4 posted 03-09-2011 09:26 PM

Again, thank you. There are some really important things in your blog posts that might seem simple, but if you think about them for a second, you realize just how much of a difference they will make. Mentally as well. I’ll try to take it all to heart.

View BigTiny's profile

BigTiny

1664 posts in 1547 days


#5 posted 03-09-2011 09:43 PM

Hi all.

Again, thanks for the feedback.

Sheila, those accordion folders are great for an operation like yours. All I would advise is to do the scan and CD ROM thing, just in case, and store the disks somewhere away from home. No sense doing backups if they can be lost in the same disaster, eh?

Edwin, the truck is not a suitable storage area for your paperwork! If the truck were to get stolen (I live in the auto theft capital of Canada, Winnipeg) your receipts are gone with it. Not good. It takes seconds a day to bring them in and put them away where they belong. Start doing it daily and you’ll soon get into te habit and do it without even thinking about it. It just becomes part of your routine.

Div my friend, we all need motivation from time to time. If I’ve been able to provide some to those reading my blog, I’m happy. It’s what I hoped to do with this series.

HorstPeter, there are no “great secrets” to becoming successful in business. It’s 99% hard work and 1% common sense. However, I’ve found that “common sense” is seldom common. (grin)

Paul

-- The nicer the nice, the higher the price!

View BallardPops's profile

BallardPops

18 posts in 1299 days


#6 posted 03-09-2011 11:10 PM

Hi Paul – Great Advice! Now if I can just get my office mucked out enough to get to the file cabinet I can muck it out and get rid of the 15 year old files in prep for the new ones. Good seeing you over here. Look for you over at the other place.

Pops

-- Ballard Pops

View BigTiny's profile

BigTiny

1664 posts in 1547 days


#7 posted 03-10-2011 03:49 PM

Hi Pops. Welcome to my other home away from home. It’s no secret on either LJ here or over on Tommy’s board that I hang out in both establishments.

This place has a lot more photos while Tommy’s gets into the discussions more. Both are great and seem to compliment each other. I’m sure you’ll enjoy your time here too.

-- The nicer the nice, the higher the price!

View Sheila Landry (scrollgirl)'s profile

Sheila Landry (scrollgirl)

7665 posts in 1578 days


#8 posted 03-10-2011 06:59 PM

I just wanted to follow up. Just to show how simple it can be to get organized. I found some printable ledger paper here” http://incompetech.com/graphpaper/ledger/ ”. It gives you several choices with number of columns, etc. All you need is a pocket folder for paper receipts and the ledger to write down expenses and income. What can be easier?

Thanks again, Paul! :)

Sheila

-- Designer/Artist/Teacher. Owner of Sheila Landry Designs (http://www.sheilalandrydesigns.com) Scroll saw, wood working and painting patterns and surfaces. "Knowledge is Power"

View BallardPops's profile

BallardPops

18 posts in 1299 days


#9 posted 03-10-2011 10:24 PM

Hi Sheila – Great catch on that FREE printable ledger paper!

Hi Paul – I’m glad you brought up this place over on Tommy’s board. Both look to be very interesting to me. I will keep following both places. Now, back to checking out more shop pics. I love to look at other shops and get some good ideas.

Pops

-- Ballard Pops

View BigTiny's profile

BigTiny

1664 posts in 1547 days


#10 posted 03-11-2011 11:37 AM

Hi Sheila.

Thanks for adding the very useful downloadable forms to the discussion. This is what LJ is all about, friends helping friends.

-- The nicer the nice, the higher the price!

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