Are you keeping up to date with the paperwork and recordkeeping?
Paperwork and recordkeeping can be among the most tedious parts of running your own business, but it’s essential to your success. Follow these tips to stay on top of things.
Manage physical and digital clutter. Even in today's digital age, the documents required to run a business accumulate quickly. A tower of paper stacked on your desk or table looks untidy and unprofessional, takes up work space, and risks overwhelming and discouraging you every time you look at it. The same is true for an inbox with thousands of unread or unorganized emails. Worse, digging through those stacks when you need that exact receipt or contract wastes valuable time and will make tax season a complete nightmare--especially if you get audited.
Invest the time upfront to set up your physical and digital filing systems and keep them up to date. There are several systems for managing paperwork and records, many of which are inexpensive or even free. At a minimum, your business filing system should include the following:
- A physical inbox to hold your unprocessed paper communications and records.
- A digital inbox to hold your unprocessed digital communications and records.
- A system of physical files to store important paper records for your business in a manner that makes them easy to find.
- A system of digital files or folders to organize and store digital records.
The knowledge that your business's paperwork is in good order and ready to review at any time can grant you peace of mind and make you more confident, productive and, ultimately, more profitable.
Keep a daily administrative routine. Once you have your systems in place, set some time aside each day to manage them. During that time, gather all of your new physical records and put them into your physical inbox; do the same with your digital records if they're not already in your email inbox. Then, process each one systematically. Respond to emails, delete or throw away junk mail, and pay invoices. Add larger tasks generated by communications, such as completing a new project, to your to-do list or schedule. Most importantly, file records that need to be saved in the appropriate location. Delete or discard everything else. Your inboxes should be empty by the end of your routine.
Consider hiring help. If your business has grown large enough to require more than a few minutes of paperwork and recordkeeping per day, you should strongly consider hiring help. You might be hesitant to add another expense to your overhead costs, especially for something that you can do yourself. But remember opportunity costs. Your time is your most valuable asset, and every minute spent doing something is a minute spent not doing something else. Let's say you charge $150 per hour for your consulting services and you spend an hour per day on paperwork. Hiring someone to take care of that paperwork for $50 per hour would allow you to spend that extra hour on consulting work, thereby netting you $100.
Are you optimizing costs, expenses, and deductions?
Smart contractors always know where their money is coming from, where it's going, and what it's doing for them. Follow these tips to be sure you're making the most of every dollar:
- Digitize and automate as many of your business processes as possible. For example, save time by using RocketSign® to sign and get your contracts signed electronically instead of waiting for paper copies.
- Invest in bookkeeping software and monitor and update it as part of your daily routine.
- Research the tax deductions you will most likely claim. Create specific physical and digital folders for records related to those deductions. If you have questions about deductions or any other tax law issues, Rocket Lawyer can help.
- Maintain separate bank accounts for business and personal expenses and income. Most major banks offer the option to open and manage multiple accounts quickly and easily.
- Pay yourself a regular salary or commission. Be sure to set aside regular amounts--typically 25 to 30% of income--to cover income and Social Security taxes.
- Consider Incorporation. When businesses grow, creating a formal business structure is a good idea to protect yourself from liability and to ensure your business is ready to grow to its full potential.
Have you started planning your contracts for next year with your regular customers?
Regular customers are the lifeblood of a thriving business. It's never too early to start thinking about how to establish, maintain, and even expand such relationships. The end of summer can be a good time to review your current contracts and begin lining up your steady income stream for next year. Consider the following questions:
- Which of your customers are likely to need similar services next year? Pay special attention to customers who have been happy with your work and with whom you have a positive working relationship. These customers are not just the most likely to renew their contracts with you but will also keep you feeling energized and successful, and might send you referrals.
- Do you need to modify your services or offerings to better meet these customers’ needs? Take a moment to research market trends and issues affecting your customers' industries. The COVID-19 pandemic created a huge need for remote work and meeting options, for example. Express your desire to better meet your client's needs and solicit honest feedback about how you can do so.
- How can you expand your relationships with your best clients doing similar or related work? A client who loved the work you did planning her company's annual summer retreat may be open to you also handling this year's holiday charity drive event. If you offer services in the off-season, make sure your clients know what else you do.
Once you've locked in terms for continuing your relationships with your regular customers, create simple but professional contracts and use RocketSign® to sign and store these contracts quickly and efficiently.
Have you reviewed your summer marketing plan?
Creating a marketing plan is an excellent way to grow your business during the summer months. But your plan won't drive growth if you just create it and never look at it again. Adjusting your plan before the end of the summer season can help you to finish even stronger, or cut unnecessary costs.
Set aside some time to review your plan and compare where you are now to where you planned to be at this point. How many of your planned campaigns have you completed? How many regular customers have provided you feedback or reviews online? Have you updated your marketing materials to take advantage of seasonal themes and holidays? Even if you haven't met all your marketing goals, there is still time to close the gap between now and the end of the season. Consider an end of summer sale or a back-to-school social media campaign to give your business a revenue cushion heading into the holidays.
Have you booked a vacation yet?
As a contractor, you know better than most that time is money. The drive to be successful, coupled with the never-ending list of tasks generated by running your own business, can lead many contractors to run themselves ragged. But that approach simply isn't sustainable. Beyond diminishing your quality of life, exhaustion and burnout will hurt your productivity and eventually your business will suffer. Independent contractors have to schedule their own regular breaks and vacations to rest and recharge. Having a vacation booked in advance can give you something to look forward to at the end of your busy season, and you don’t even need to go anywhere. Just having some planned time off can work wonders for a person.
If time and finances, or COVID-19, are a concern, consider a "staycation" during which you step away from work for a set period of time to connect with friends and family, or engage in activities you enjoy, such as your hobbies. Whether you're in your home or a dreamy destination, however, make a commitment to not engage in any work--not email, not bookkeeping, not phone calls--except during emergencies. You will come back fresh and ready to grow your business and plan for the next busy season.
Remember that you can always reach out to a Rocket Lawyer On Call® attorney to answer your legal questions. You can also get the legal help you need anywhere and on any device using the Rocket Lawyer Mobile App.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.