It doesn’t matter what type of industry you are in, you should create a thorough paper trail. Paper trails can be used when you are audited or in legal cases. Despite the name, paper trails are more likely to be in a digital form. If you are in a situation where you need to look back on details pertaining to a certain time, client, or employee, it is better to be prepared with a paper trail.
The convenience of keeping a structured paper trail may not seem relevant until it comes time to file taxes or be audited. Receipts are essential to justifying any transaction or deductions the company has made. While paper backups are great, there should be a digital filing system to make it easier to locate specific receipts. With a paper trail, there is no digging through the trash, filing cabinets, or endless emails to find what you need. Everything will be in order and easy to find.
With a digital paper trail, tracking payroll is made easier. Timesheets and punch cards could be lost, altered, or damaged making tracking an employee’s hours a difficult task. Having an automated timesheet is much more efficient, making payrolls job much easier. It creates an easier process of checking hour records and importing payroll information during the tax season.
Having a detailed client record makes your interactions smoother. You know when they’ve last paid, what services you provided for them if they’re recurring customers, and when payments are due. In a situation where a client has a complaint (some go as far as court proceedings), you will have all their billing and communication records ready to go.
You are able to keep records not only for your clients but for yourselves. You can see the bills you owe which can help with paying your bills on time and also track which ones you have already paid. There is no more worrying if you forgot to pay someone. For small businesses, this could go a long way when qualifying for credit. You will prevent late fees and improve your relationship with your vendors.
**This article is for informational purposes only and is not intended to be legal advice. In relation to your individual situation, always seek advice specific to your circumstances from a lawyer.