7 Ways to Avoid Serious Record-Keeping Problems

Here’s something they don’t tell you in the brochure for business school: There are hidden pitfalls in a part of doing business that seems relatively very easy — record-keeping. Research shows that there are basic questions about record keeping best practices that the majority of small business owners cannot accurately answer when tested! This is even though there are official records that business owners are legally required to create, maintain, and in many cases to retain for specified minimum periods, and even possibly to protect using specified security protocols.
It’s Just Record Keeping. How Hard Can it Be?
Some kinds of records that are encumbered with legal requirements for their creation and handling include payroll, accounting, safety records, employees’ files, and others. As a business owner, do you know which kinds of records require regulatory compliance? Do you know what is required to go into those records? How do you maintain succinct and complete legal records? Do you know which types of records require which types of elements for business, legislative, regulatory, or accountability purposes?
There are even requirements for timely creation and of certain kinds of business records. There are recommended ways to avoid the common problem of duplication, inconsistency, incomplete records, disconnects, efficient record naming practices, maintaining compliance on required elements, confidentiality, and record retention timelines, etc.
Above the most critical ways to avoid serious problems in your business record keeping is to know the laws regarding timeframes of record retention for your pavement sweeping business. They’re different for various types of payroll records, personnel records, employment tax records, other tax records, injury records, FMLA documentation. There are yet other rules for issuing pay stubs, and any other FLSA or other legal requirements for business record-keeping.

What IS an Official Business Record?

The majority of commercial power sweeping business owners already know how to create a typical record and maintain organized files. Most may also recognize that any business document (paper or digital), business video recording, etc., can likely be defined as one of these three types of records:
1. Transaction Record: Documentation of a purchase, sale receipt, invoice, inventory count, training sign-in sheets, and many others.
2. Compliance Record: Documentation for purposes of meeting legal or regulatory requirements for business documentation.
3. Historical Record: Documentation that serves to preserve the business’s memory of its history of activities, for example, through policy statements, corporate meeting minutes, etc.

Steps to Avoid Serious Problems in Your Business Records

There are right and wrong ways to manage the creation, maintenance, and preservation of necessary business records. Here are seven things you need to know, to help you develop the most useful records possible and ensure compliance in your business’s record-keeping:
1. Create Records that are Appropriate for Their Type.
Determine which of the above three types of record you are creating, based on the basic purpose the record is meant to serve, and make sure that the record you’ve made meets all the business, legal, and/or regulatory requirements for a record of that type.
Ensure that all information documented on the record is correct, and that it conveys decisions made, actions taken, and reasons for both.
2. Be Strategic in Naming Records.
Whatever record you’re creating — an email Subject Line, a simple label for a digital or paper file or folder, a checklist, meeting notes, etc., think about what can be expected to happen months and years down the road, when someone needs to locate and refer to that file for future purposes.
It may seem irrelevant at the time you’re creating the document, but after you eventually have a dozen and then a few hundred files in the same category, you’ll thank yourself for making it easy to find your records. To achieve this level of efficiency in your filing system, simply code all file names consistently, using language that makes the most sense for easily locating files of that type on that subject.
3. Be Timely in Creating Records.
To borrow a business proverb, don’t put off ’til tomorrow the creation of necessary documentation you can create today. The human memory should not be relied upon to deliver all the details you need to include in important business records. The entire purpose of records is to allow us to avoid depending on memory.
Waiting to generate a record of an event is most likely to result in documentation that is compromised, less than an ideal accounting. So, discipline yourself and your team to stop and make time to create needed records as quickly as possible following an event, to help ensure maximum accuracy of the information your business will retain and rely upon.
4. Maintain Records Completely and Concisely.
Develop a habit among your team members of checking each record carefully after creating or updating it, before filing it away. Make sure that all pertinent details of decisions and actions taken are reflected in the record, as needed.
Check for dates, times, signatures, necessary attachments, etc. Go and get any missing information from whatever resources are available to provide it, and put it into your documentation promptly. Leave out unnecessary information, opinions, questions, references, subjective comments, etc.
5. Prevent Duplication of Records.
Duplicate records can cause systems to run off track. Creating temporary reference documents can often lead to such records ending up in the permanent files, to later be updated instead of the originals. Such errors can create serious problems when the original end up ignored and the duplicate is managed as if it’s the original for some time.
When the original is eventually discovered with missing updates, perhaps including items such as original signatures from people who updated the file and have since left the company, the integrity of the record can be viewed as severely compromised.
To correct the problem, though only partially, information from the duplicates must be either transferred onto the original, causing entries to be out of sequence but at least contained all on the original record.
Or, the errant duplicate is simply stapled to the original, to preserve the entirety of the record, with at least fully integrity in terms of exposing the recording mistake and the implemented solution. But, unfortunately, the result remains a confusing, poorly-managed business record.
6. Control Access to Your Business’s Records.
Sensitive business records can include paper and digital files, video and audio and files, emails, paper letters, other items sent or received via regular mail, etc. Secure storage and eventually secure disposal of confidential documentation is necessary to maintain confidentiality.
Managing access is at the top of the list of business record-keeping best practices. Of course, blocking access to some of your sweeping business records doesn’t ensure that an effective routine will be kept intact over time. The most robust system is pretty straightforward:
Label all confidential files as CONFIDENTIAL, and take necessary measures to protect confidential records. That means keeping all confidential records protected from unauthorized access, by locking paper documents in a secure space, and by encrypting digital files to restrict access to authorized users only.
7. Know When to Keep and When to Dispose of Business Records.
Don’t throw away business records prematurely. Do get rid of them when it makes sense to do so, to avoid being over-run by useless records piling up and taking over your office space. But, before you dispose of a record, find out the legal requirements on how long you must keep records of that type.
This particular area of managing business records is one in which too many small business owners lack too much basic knowledge. A TSheets survey of 400 business owners in the U.S. reveals that business owners do not know how long they are legally required to retain various critical business records :
1. Fewer than 62% of employers are aware that employee illness and injury records must be kept for five years.
2. Only a little more than a third of employers know that they’re required to keep FMLA records for three years.
3. About 66% of employers do not know that they must keep payroll records for no less than three years.
4. Over 90% of employers are not aware that they need to keep employment and personnel records for at least one year.
5. Fewer than 17% of employers are aware that employee timesheets must be retained for a minimum of two years.
6. Under 79% of business owners are aware that they’re required to retain business tax returns for a minimum of three years.
7. Fewer than 14% of employers are aware that employment tax records must be retained for at least four years.
Business Records Management in a Nutshell
So, as you can see, there are challenges to avoiding serious problems at every point of activity in business record keeping. So, the solution is in training and commitment to diligence in following policies for ensuring consistent accuracy and legal compliance.
FLSA lawsuits have increased by an alarming 456% over the past couple of decades. Many cases involve violations of record-keeping requirements. This statistic points to the necessity to be informed as a small business owner about the essential need to keep timely, accurate, secure records and retain them for as long as the law requires.

Source
https://www.tsheets.com/flsa-research-tool
https://blog.tsheets.com/2017/business-help/business-owners-failed-record-keeping-quiz
https://www.accountingdepartment.com/blog/bid/333858/Is-Hiring-a-Virtual-Bookkeeper-and-Financial-Controller-the-Right-Choice-for-Your-Business
https://www.accountingdepartment.com/360-degree-accounting-process-offering-full-circle-service-and-support
https://www.mcmaster.ca/privacy/fippa/docs/FIPPA_BestPractice.pdf
https://www.strath.ac.uk/media/ps/cs/foi/recordsmanagement/Managing_Information_and_Records_-_Guidance_for_Staff_v1.0.pdf

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