For some, spring cleaning is a chance for renewal—a fresh start to a newish year. As you and your business move further into the spring season, it may be a good idea to take a look at your finances and clean those out as well.
1. Paper and Electronic Records
While not all financial spring cleaning refers to physical mess, you probably do have some of that to deal with before anything else. To start off, determine which records you need to keep for a certain amount of time, and store them correspondingly. Then you can get rid of superfluous documents.
- Statements. For the sake of space, you’ll want to find out if you can store financial statements from your banks and credit cards electronically, or if you need to keep a physical copy.
- Tax documents. You need to keep these documents until the statute of limitations runs out, which is 10 years in most cases, in case you get audited by the IRS. That includes the tax forms you submitted, as well as all of the supporting paperwork.
- Receipts. Unless you’re claiming something on your taxes, you can shred or throw away most receipts once they’ve been entered into QuickBooks or your accounting books.
- Additional business-related paperwork. Consider scanning as much old paperwork as possible into your system, then shredding it, rather than keeping paper copies of everything. You’ll want to store it in a secure location, but use your judgment—some things aren’t worth keeping for documentation.
2. Budgeting and Debt Repayment
Once you’ve literally cleaned out your financial department, you can focus on the nitty gritty of re-evaluating budgets and debt management.
- Re-evaluate your budget. It’s important to evaluate your budget regularly to ensure that it’s focused around SMART goals and still meets your business-related needs.
- Focus on debt If you’re dealing with stressful debts for your business, now is a good time to buckle down and come up with a repayment plan.
3. Protection and Security
Once you have a system in place for scanning documents and planning your budget, you need to store your information in a secure place. Identity theft and data loss is a real threat, and the less available your private information is, the better. You also need to backup your files in case something happens to your main work computer system. Mistakes happen, and it’s better to protect yourself against the worst-case scenario.
4. Starting Fresh
Once everything is freshened up, try to implement and maintain good accounting practices so that you have less spring cleaning to do next year. That could mean establishing a better process for transactional accounting or hiring an accounting consultant to perform some of the more technical tasks you need completed.