Record Keeping

Your bookkeeping system and the specific records it maintains will often be established for the primary purpose of paying taxes and complying with governmental mandates, none of which are intended to help you manage your business for profit.

Among the many records to be maintained are time cards, proposals, estimates, job-costing analyses, contracts, permits, tax records, payroll records, inventory, tool locations, and truck costs. Some of your records are required to be maintained for specific periods by various governmental agencies, such as the IRS. Your CPA can provide you with a listing of records and their retention periods.

You can keep records with a physical filing system but you can eliminate much of the paperwork by using electronic filing. Don’t spend unnecessary time scanning documents just for the sake of keeping them on your computer, but when you have communication by email with documents attached, you should store those on the computer. Be sure to create a directory and file structure for the folders so that others in your office know where to find them. In some instances, you just might find it more effective to keep all your paperwork in the filing cabinets, filed by project.

Your accounting system must be constructed to provide not only tax and mandated data, but financial management data as well. Remember, you’re not in business to pay taxes—you pay taxes because you’re in business! You’re going to be required to pay some taxes whether you make money or not.

You’re in business to make a profit, not to pay taxes. Learn the difference between a bookkeeper, a CPA, a tax advisor, and a tax attorney. Learn the difference between tax evasion and tax avoidance. One is legal—the other is not! Tax avoidance is professional management in action!

Vehicle records should include operating and maintenance and repair costs. You can make accurate decisions about replacing vehicles only when the cost of operating an older vehicle (including maintenance) exceeds the cost of payments or leasing on a new vehicle. A factor that contractors many times fail to include in determining vehicle costs, is the lost time for labor when they're unavailable due to repairs or service.

The above content is extracted from Mike Holt's Business Management Skills program.

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Mike Holt is an author, businessman, educator, speaker, publisher and National Electrical Code? expert. He has written hundreds of electrical training books and articles, founded three successful businesses, and has taught thousands of electrical code seminars across the US and internationally. His company, Mike Holt Enterprises, has been serving the electrical industry for over 40 years, creating and publishing books, DVDs, online training and curriculum support for electrical trainers, students, organizations, and electrical professionals. 

Mike has devoted his career to studying and understanding the National Electrical Code and finding the easiest, most direct way to share that knowledge with others. He has taught over 1,000 classes on over 40 different electrical-related subjects to tens of thousands of students. His knowledge of the subject matter, coupled with his dynamic and animated teaching style, has made him sought after from companies like Generac, IAEI, IBEW, ICBO, NECA, and Fortune 500 companies such as IBM, Boeing, Motorola, and AT&T. He is a contributing Editor for Electrical Construction and Maintenance Magazine (EC&M) and formerly Construction Editor to Electrical Design and Installation Magazine (EDI). His articles have been seen in CEE News, Electrical Contractor (EC) International Association of Electrical Inspectors (IAEI News), The Electrical Distributor (TED) and Power Quality Magazine (PQ).