038 Documentation Power: Boosting Business Efficiency and Accountability

This week’s episode of Money Through Ease is all about documentation in your business. Bookkeeping is part of this documentation, but it goes beyond that. You need to have written procedures and policies for everything in your business, and your host Regan Bashara is here to impart why business owners should do this. If you want to streamline your operations, hire and train employees better, and have consistency on your entrepreneurial journey, listen to this episode. Comprehensive recordkeeping is invaluable to running a successful business.

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Hey there, welcome back to another episode of "Money Through Ease," the podcast that's all about making your small business journey a breeze. I'm your host, Regan Bashara, and today we're diving deep into the world of documentation and why it's the secret sauce for your business. Think of it as the golden thread that weaves together your accounting procedures and record keeping, helping you crush your financial goals with ease. Here's the significance of documentation and accounting, including maintaining accurate financials and facilitating tax compliance and reporting. What the heck does that mean? Here's why we want to have accurate financial records. Everything that we do in our businesses is going to be what gets reported on our tax returns each year. So, the way to grow your business and to set and achieve financial goals is through documentation. What do you want to happen in your business? How will you measure that? How do you know when it happened? That's what's important about documentation. Every business needs to have documentation for their financial records, for their procedures, all of the records that need to be kept for all of the reasons, whether that's because you have to file taxes in the United States every single year or whether you're hiring a workforce and you need them to understand what their role in the business is, what they're expected to do, when, how, and how do they know that they did it and that it's done and that it's correct. Also, financial clarity is achieved through documentation. This is how we get a better understanding of your cash flow. It's through tracking your transactions. Sometimes we only need a little bit of data to see what's going on in your business, but my belief is the more data, the better. If we have a couple of years’ worth to look at in terms of your bookkeeping and your financial records, we're going to get a better picture, a more accurate idea of how cash, how money flows through your business, what your cash flow is like. But if you just started your business this year or maybe last year, that's OK, you're transacting, you have money coming into your business, you have money going out of your business. And if we? Have a way to document those financial transactions. Even if it's just a year or less than a year's worth of data, we have something to look at. We have something that we can use to analyze. We can make predictions about what might happen to come in your business and we also save time when it comes time to file. Your taxes, and in the case that you were ever to be audited by the IRS, having your financial documentation together. Is going to give you a lot of Peace of Mind. You've got all your ducks in a row. We're not going to be procrastinating anymore when it comes to our taxes, stop taking a shoebox full of receipts and dumping them on your tax preparer every year and then running away before they can even ask you any questions. No more procrastination, financial documentation, financial record keeping, keeping track of these things all year means that when it comes time to file taxes, you have a different excuse this year and it ain't your bookkeeping. And if you were ever to be audited. Having your financial records. Well documented means that you've got the backup to support you in that process. If you were to be audited. Let's explore how documented procedures streamline business operations, how it can enhance employee training, and foster consistency in your business. Documented procedures mean that you have them written down and not just living inside your head. What happens in your business beyond documenting your finances, I recommend that you have a procedure for everything that happens in your business, and that procedure needs to be written down—whether it's in a Word document on your computer or if you've got it written down on a piece of paper. It doesn't matter to me. However, you work best is fine, but it needs to be outside of your head—especially if you have other people that you're going to be delegating these procedures and tasks to. So, let's talk about why I recommend that you have a procedure for everything in your business. This is going to streamline your operations. So, what can be automated in your business? If we have all of your tasks written down and we have your procedures outlined and written out, that means that we can look at which steps can be automated, what things can be delegated to other people. If you have people to delegate to, whether that's a contract or a virtual assistant, or if you have employees, what can you delegate to them? If you have it written down, it's pretty easy to cross a few things off the list as "I don't need to be the one doing that. Somebody else can handle it." And then, which one of these tasks needs to be entirely given up? Which part of this procedure that we've documented and written down is a complete waste of time, and it really doesn't need to be done? That task does not have a purpose. It doesn't return anything for you. It's not a good investment to make. When we write things down, we can get really clear about what we want to delegate, what we can automate, and then what we can get rid of. If you have new employees, if you have a workforce, if you have people working for you in your business, it is not a problem to train them when you have your procedures well-documented. Does something need to be done consistently in your business? Does it need to be done the same way every time? Is it done a different way depending on certain conditions? Hello, that's where documentation comes in. We have to write that **** down, y'all. So, if you have a warehouse and you've got employees that are working in the warehouse and doing things with heavy machinery, and you don't have a process written down for how those employees need to handle that machinery, if they need to have somebody else observing them, if they need to stop other machinery so that they can work on that machinery, if you don't have your documented processes and procedures written down so that your employees can follow them, basically what happens is that those folks end up playing a game of telephone for the instructions on how to do a certain procedure. You've got the one guy that figured out how to work that machine whenever it was first added to the warehouse. Maybe he received training from the manufacturer, and so he knows what to do. But when somebody else gets hired and he needs to teach them how to handle that machinery, he doesn't give them the instruction manual. He just tells them, "Oh yeah, here you just push this button here. You pull this lever here," and that person gets a very watered-down instruction on how to use it. This can cause safety issues, as I'm sure you've already thought about. Essentially, you're playing a game of telephone, and then that person is expected to train the next guy, or girl, or person, and they end up leaving out certain steps, leaving out important cautionary risks, and how to avoid injury and disruption of work. And as you go down the line when people are hired on and trained on how to use this machine, if it's not written down, I guarantee you the human beings that are working for you are going to leave things out or forget things entirely. And so, many folks down the training line, you've got somebody that's being instructed how to use that machinery that is missing out on a lot of important information because they're relying on verbal instruction from somebody else who is relying on verbal instruction from somebody else, and so on. We have got to have things documented in our business to avoid this. This decreases risk for your business. This makes sure that you're operating safely, especially if you're dealing with machinery. But even if you're not dealing with heavy machinery, if you have sensitive client information that needs to be kept confidential, you need to have a process for how that is kept confidential, how to handle client information so that each employee can read and understand and know how to do that so that your clients' information is actually kept confidential. This is very important for people like me who are accountants. We want to make sure that things are actually complete, done the way they were supposed to be, and that when somebody says, "I'm done with this thing," it's accurate and in fact complete by our standards. So here's the value of comprehensive record-keeping in legal matters and client relations, as well as the future planning of your business. If you have documentation for what needs to be done, how often it needs to be done, and by whom, then you can plan for the future of your business. Also, if your process is documented, this engenders trust and accountability with your clients. Be very clear about what your clients can expect from you and how you do your work. It's not necessary for them to know every step of the process. But they're going to trust you a lot more with whatever it is that they hired you to do if you have a system that is well-documented and you are able to answer the questions for the things that they want to know about. If you cannot answer their questions about what you're doing for them, why you're doing it, how you're doing it, or when you're going to do it, they may not trust you to actually get the work done the way that they need. And when you're clearly communicating with your team, your workforce, your employees, and your clients, this increases trust and accountability for everybody. Here's a way that you can get started on documentation right now with your financial records. Today, I want you to go download chaos.com, which is my free receipt organization. You already know that you need to keep your receipts. That's what the IRS tells us that we have to do. That is the way that we record our finances, and you can learn my system for managing the paperwork that happens in your business. That way, you know where to look when you need to reference a transaction or maybe a contract that you signed with a vendor. If you want to learn how to document procedures in your business, that's going to be part of my upcoming entrepreneurial bookkeeping course, "Mind the Gap." I'll be teaching you how to document everything that happens in your business so that you and your employees know exactly what's going on in the business at any time. This will also help create an accountability system for the things that you delegate. You'll document how things should be done and create a system for everyone to check their work and know who to ask when they run into a roadblock. Thanks for hanging out with me on this episode of "Money Through Ease." If you're hungry for more money-smart tips, follow me on social media so that we can stay connected. Don't forget to subscribe to my email list where you'll get exclusive content and be the first to know about fresh episodes of this podcast. And hey, before you go, head over to the show notes and snag your free receipt organization guide, chaos to calm. This is a game-changer for keeping your finances in check and your financial records straight. Until next time, keep documenting your path to money mastery.