Only 1 out of every 220 taxpayers were audited by the IRS in 2020, CNBC reports. Being ready for yearly tax filings and possible audits are prime reasons why it’s important for businesses to keep good records. In addition to legal obligations, record keeping can also help businesses protect against data loss, stay organized, and steer clear of unnecessary problems later down the line.
Minimize compliance and audit risks
Comprehensive record filing and retention is an essential to ensure your business complies with set regulations. With a reliable record management system in place, you’ll be able to access key documents as needed for tax filings and other mandatory tasks.
Strong record management is also particularly important for financial records. If you fail to archive these records correctly, you may be hit with big fines or penalties and even possibly a lawsuit if your non-compliance is considered purposefully negligent. You should always contact a skilled accountant who can provide the best audit services to your business. As a business owner, you can greatly benefit your company by seeking an opinion from an external source like parkerrussell.co.uk.
Protect against data loss
If your business is online, or has any online presence, website and social media archiving should also be an essential component of record keeping. Universities, for example, need to archive their digital content in order to protect against data loss and preserve important information valuable to students, researchers, and staff, as well as wider society. It’s also essential businesses store any personal data within their digital archives in a way that’s compliant with GDPR legal framework. In turn, any third-party data processors used in the digital archiving process (like archiving and cloud storage providers, for example) should also be GDPR-compliant themselves.
Improve organization and efficiency
A strong records management system improves organization and efficiency, as well as minimizes the potential for human error. A singular effective and unified record-keeping system rolled out across the whole business fundamentally ensures employees can quickly and easily store, locate, and retrieve relevant documents as needed. In turn, productivity increases and less pressure is placed on employees to save or retrieve records with the use of messy individual, ad-hoc storage systems (an inadequate process which can ultimately lead to document disarray, confusion among employees, and overall record-keeping inefficiency).
Good records management is essential for business success. By keeping comprehensive business records, you can better minimize your compliance and audit risks, protect against data loss, and improve your overall organization and efficiency to keep your business running smoothly.