Recordkeeping – What you need to know

Recordkeeping, what you need to know



the act or process of creating and maintaining records; archiving

As the definition reads… Recordkeeping is typically used in the context of official accounting and personnel information, especially for businesses and other organizations. Accurate recordkeeping is key to many aspects of your business’s success – from assessing your profit margins to ensuring that you’re in compliance with various rules and regulations. There can be both legal and financial implications if your business does not comply with recordkeeping requirements for tax, business and privacy laws.

Choosing the right recordkeeping system: Should your business use a manual or electronic recordkeeping system?

It seems crazy to think that in 2021 some companies still operate under a paper-based system. Not so crazy though if your staff’s median age is somewhere in the late 40s to 50s! While some business owners prefer manual recordkeeping systems, most businesses use electronic recordkeeping systems — making it easier to capture information, generate reports and meet reporting obligations.

Even in today’s climate, a small business may still be able to keep most of its records on paper. Given the growing amount of data hacked from major companies, paper might even seem more secure. There are, however, numerous advantages to converting paper-based files into digital data. With sensible precautions, you can minimize the potential risks.

There are a number of considerations when deciding whether to set up an electronic or manual recordkeeping system, as each has its own advantages and limitations.

Some advantages of manual recordkeeping systems:

  • More cost effective to initiate;
  • Correcting entries may be easier with manual systems, as opposed to computerised ones that can leave complicated audit trails;
  • The risk of corrupted data is significantly lower;
  • Data loss is less of a risk, particularly if records are stored in a fire-proof environment; and

At a time when power outages are a regular occurrence, manual records are always accessible.

To name a few limitations of manual recordkeeping systems – inconsistency in data entries, mis-keying information, human error, lower labour productivity and inefficient access to information. Imagine looking for a physical file in a registry!

Electronic recordkeeping  systems:

Companies in a variety of industries are seeing the advantages of electronic recordkeeping systems such as reliable data backups and disaster recovery methods, accurate, organized electronic databases, instant access which is not location specific and reduced physical storage requirements. One of the other more notable advantages of an electronic recordkeeping system is having the ability to keep files indexed. This means that each document entered into the system is categorized and registered according to specific properties that you can define. Most businesses make use of software programs to simplify electronic recordkeeping and produce meaningful reports.

Of course, there are also disadvantages to electronic recordkeeping systems. When information is stored on paper and locked in file cabinets, someone would need to physically have access to the papers to obtain information. Hackers don’t need to worry about this when everything is stored digitally. Business owners may get too busy to update software and virus protections, making it easier for hackers to install spyware, steal information or hijack company data. When everything is stored digitally, there is the potential that a system may crash and the data becomes compromised.

Personally I believe that one’s business acumen and work experience will be a guide as to the preference for a manual or electronic recordkeeping system. Ideally adopting both, recognition of one’s personal strengths or weaknesses in the role of administrator, will influence one’s decision.

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