Operating You, Inc.
that you are running a business you need to set up the infrastructure
that goes with it. Some of the operational requirements will be
dictated by how you have structured – as a sole proprietorship or
an incorporated business. Let me discuss some of the basic ones that
you will need. I am making an assumption that you know the equipment
and material you need to conduct your service offering. For example,
if you are a consultant, you probably need a laptop with necessary
applications. This list is in addition to that.
- Accounting System
need a system to track your business income and expenses. I strongly
recommend that you separate your business income/expenses from your
personal ones. This not only allows you to track the success of your
business, but also enables you to accurately report taxes to IRS (and
benefit from business expense deductions). Here are a few things you
can do –
Open a business checking account to manage
business cash flow. You may want to open this at the same bank where
you have your personal savings/checking account. That may allow you to
avoid maintenance fees and transfer money to/from your personal account
Obtain a credit card for your business
expenses. The payment grace period offered by credit cards enables you
to better manage your business cash flow by delaying payments. Getting
the miles or points is an extra bonus. Just make sure to pay on time
and to avoid cards with annual fees.
Track every income and expense. Many folks
just use an Excel spreadsheet to track their business expenses.
However, you should be able to use dome of the free tools available
online. Two of the most popular ones are: www.mint.com and www.outright.com
Keep all your receipts. This will come in
handy if you get audited by IRS. Here are some ways –
You can either put them in a box or
envelope and label them ,
Scan them and save digital copy. IRS has
certain rules on this. The two most important are – the scanned copy
should be legible when printed, and the digital records should be
indexed and cross-referenced with the actual transaction. See IRS
publication (TBD) for details on these and other requirements.
You can use tools such as NeatReceipts that
comes with a scanner and software, or
Use service provider such as
www.Shoeboxed.com. They will scan and store the receipts for you. They
offer a free service and a premium paid service.
- Records Management/Filing System
balance sheets, reports, checks, letters, sales brochures, payment
reminder letters, notes, discussion notes, project plans... hold it.
We're self-employed here not in the business of setting up a library.
Right? The truth is that there is enough documentation going around
with any self-employed business that one does need to arrange
everything or get smothered in a completely jumbled mess. Also,
organizing documents is important because we have to deal with a mix
of traditional paper documents and electronic files.
documentation management certainly means increased productivity. With
orderly document management, you don't waste time and you always have
your accounts, important communication, returns, etc. all there when
you need them.
questions to ask before you set up your own document management
system – both for e-files and paper documents
Who will handle my document management
system? Do I really need to hire someone or can I use good tools to
handle it efficiently by myself?
What is going to be my basic document
template/in-house style guide? Time-stamping, date stamping, levels of
document sharing, etc. Where would the more confidential documents go?
How would the documents be filed and
archived? Should I go for storage in alphabetical, subject-wise or
date-wise storage? Which documents would be accessed more often than
- What is the physical
or electronic space available to me? Is it sufficient?
storage of documents
physical storage of documents you won't have much problem finding
regular folders, cabinets, etc. Try color coding if you are
creatively inclined. Don't go for fancy trappings but focus on
utility and ease of use when buying stationery or cabinets for
physical storage of documents. Ensure a stock of labels to keep
of your documents
are several great software products that you could utilize for
e-storage of documents. Before we discuss these products, here are
some tips for proper storage of e-documents.
Organize file types
Make full use of nesting folders like all
folders for each month of year 2011 go into one folder marked 2011 with
a folder for each month. You could try folders for a financial year
instead of the calendar year.
Follow file-naming rules like no spaces in
file names, 27 characters etc. and be specific about names. No point
having a folder marked 'confidential'. Use a password instead but call
the password something that you could easily recall it when required.
Sort and cull your folders often – both for
physical records and e-records
will find details on the document management software in the
Productivity Tools section.
records to keep (list of files/folders)
is a list of records for you to start with. Prepare a folder for each
and store the documents with an index that makes sense (date, client
name etc). As your business grows, you may need additional categories
as necessary. My suggestion is to store digitized copies of the
records where possible. They take less space are easy to find, i.e.,
if organized properly. The paperless office is not just environment
friendly; but also cost effective for your business. Note that the
folders I mention here can be physical folders or folders on your
computer. Interpret them as appropriate in your case.
this folder to store records and documents related to business
incorporation, license and registration, article of organization etc.
on the type of business you are in, you should have marketing
material that explains your business’ value proposition. For
example, collaterals for a consulting business may include its
capability statement and case studies.
may have one folder for all proposals you send to prospective
clients, or separate folders for each client.
a prospect becomes a paid client, you should absolutely create a
separate folder for that client. All communications, including client
contracts, invoices etc. should be in this folder
of companies now offer Electronic Bill (E-Bill) option. Sign up for
that when available. In the rare occasions where you receive a paper
bill, after you make the payment, mark it as paid and file it in this
should also use the online bill pay option to pay the bills. Many
banking institutions offer this as a free service or at a very
nominal fee. They are awesome; your bank either does a direct
transfer to your payee account, or prints and mails a check to them.
Also, usually, the bank is responsible if the payment doesn’t reach
the payee on your instructed time.
a separate folder for your tax documents, such as tax returns and
communications with IRS and State & local Tax departments.
addition to these, prepare additional folders for documents that you
feel you need to retain.
long to retain
- Tax related
documents – six years or longer
- Contracts and
legal documents – for ever
- Others – judgment
call (better to keep a digitized copy if destructing the paper document)
When getting rid of documents, don’t just throw them into the
recycle bin. Make sure you shred the ones that have confidential or
on what type business you are in you may need to obtain business
liability insurance. If you have employees then you may also need a
Worker’s Compensation coverage in most of the states. Some
clients/states may require the Worker’s Comp even if you are the
client may ask to be named as the beneficiary on your liability
insurance and may dictate a minimum coverage amount.
type of businesses may also need additional insurance such as Loss
Omission for consulting.
addition to the processes mentioned above, you may want to consider
one or more of the following depending on whether your business needs
them. Click on each to learn more about them.