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The Importance of Recordkeeping

The Importance of Recordkeeping

How do you manage your records?

Sharlyn Lauby | HR Bartender

June 02, 2010

In the human resources world, we sometimes get on this kick about recordkeeping. It’s boring, tedious and can translate into being labeled bureaucratic. But I read an article this weekend that reinforces the need for paperwork and proper recordkeeping.

The article was titled, “The Fisherman and the Tax Man.” It’s about British Petroleum (BP) requesting tax records from fisherman seeking compensation for losses created by the oil spill. Regardless of your feelings for BP and the oil spill, the request seems pretty logical: just document your losses then we can pay you.

But what if you were paid in cash? Or you didn’t report the income? Whoops, Houston — we might have a problem. Now all of a sudden, paperwork is important.

If you’re a business that does cash transactions, it’s important to record those transactions. In fact, if you’re not aware of it … you’re supposed to record barter transactions as well.

I know it might be tempting to just pocket a cash gratuity or cash payment for services without reporting it as income. Not declaring the cash as income can come back to hurt you, like in the case of the Louisiana fisherman who can’t prove their income to declare a loss. Or a bellman who can’t prove to the bank he can afford the home he wants to purchase. And I’ve seen it happen all too often.

And it’s not just about declaring income. As a consultant, I have to keep track of my expenses. It might sound sexy to say “I don’t need a receipt”. Or you don’t want to take an extra 30 seconds to ask for a receipt. But when you own your own company…you need receipts. For just about everything.

Look, none of us want this oil spill to continue. And none of us want to see a person’s livelihood negatively impacted by the spill or anything else. Yes, keeping records is boring. But it’s necessary. Just do it. You never know when you’ll need it.

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