What records does a small business actually need?
Four, and they are less work than they sound because each one is a habit rather than a project.
| Record | What goes in it | The question it answers |
|---|---|---|
| Sales | Every sale: what, when, how much, how it was paid | What did this business earn, and when? |
| Purchases | What you bought to sell, from whom, at what price | What did the goods cost, and what is still on the shelf? |
| Expenses | Rent, power, transport, airtime, wages, repairs | What does it cost to keep the doors open? |
| Who owes you | Credit given, to whom, and what has been repaid | How much of my money is standing in someone else’s shop? |
Almost every question you will be asked — by an accountant, a lender, a partner, or yourself at two in the morning — is one of those four, or arithmetic on top of them.
Why the shoebox fails
Nearly every shop keeps receipts. Far fewer keep records. The difference is whether the paper can be matched to anything.
A receipt for 240,000 of stock is useful in March if you know which supplier it came from, which goods it covered, and whether it was paid or is still owed. By itself, in a box with three hundred others, it is a number without a story, and the person sorting it out later is either you on a Sunday or an accountant charging by the hour.
How long to keep things, and in what form
Keep records for several years rather than several months. Exactly how long is set by your obligations rather than by preference, and that depends on your turnover and registration status, so confirm it with URA or with an accountant instead of guessing from a blog.
Whatever the period, two habits make it survivable:
- Thermal receipts fade. The paper most tills print on can go blank inside a year in a warm room. Anything that matters — supplier invoices especially — wants a photograph or a digital copy.
- One copy is not a copy. A single phone holding your only record is one theft or one cracked screen away from no record at all.
What to hand an accountant
Accountants are expensive when they are reconstructing and much cheaper when they are reviewing. The difference is entirely in what you hand over.
- Sales for the period, by day, with how each was paid.
- Purchase invoices, matched to what arrived.
- Expenses, grouped into a handful of categories you use consistently.
- The credit book: who owes what, and what has been repaid.
- Closing stock — what was actually on the shelf on the last day, and what it cost you.
That last one is the one people skip, and it is the one that changes the answer most. A year’s trading cannot be judged without knowing what stock was sitting there at the end of it.
Where a till helps, and where it stops
A point of sale system produces the first and fourth records as a by-product of selling. You are not doing bookkeeping; you are ringing up sales, and the record is what falls out. Stem records every sale with its payment method, tracks stock as it moves, holds the credit book with repayments against it, and keeps expenses alongside them.
It also does the counting that the four records depend on, which is the part most people expect to do by hand:
- A running count of stock. Every sale, delivery, transfer and return moves the figure as it happens, batch by batch, so the shelf figure is not something you work out at month end.
- The arithmetic of a stocktake. You still walk the shelf and count it — no software can do that part. You enter what you actually counted, and Stem works out the difference against what it expected, records it as a stock adjustment with a reason (damaged, lost or stolen, found, or a plain count correction) and keeps it in the item’s history.
- The drawer at the end of a shift. The till works out what cash should be there from the sales it took, and sets it against what was actually counted, so a shortfall is a number rather than an argument.
- What arrived against what was sent. Stock moved between branches is counted in at the receiving end, and a difference is raised rather than absorbed.
It stops well short of accounting. Stem is a point of sale system, not an accounting package — there is no payroll, no chart of accounts and no formal financial statements in it. It will tell you what you sold, what those goods cost you and what you kept; that is a useful number to run a shop on, and it is not a statement. That boundary is set out plainly, item by item, in our guide on whether you need QuickBooks or a POS system, and it is worth reading before you assume a till has replaced anything.
The honest division of labour: a till makes the raw material accurate as it happens, so your accountant is checking real records instead of rebuilding them from memory. It does not do their job, and anyone selling you a till on the promise that it does is overselling it.
Starting from nothing, this week
- Start recording sales daily, today, in whatever form you will actually keep up. A consistent notebook beats an abandoned app.
- Put every supplier invoice in one place, and photograph the ones on thermal paper.
- Write down every expense as it happens. The ones paid in cash from the drawer are the ones that vanish.
- Move the credit book off scraps of paper and onto one list with repayments recorded against each name.
- Do a stocktake. Once, properly. It is the number you cannot reconstruct later.
The first four need no software at all — a notebook used daily will do, and doing it by hand for a while teaches you what you actually want to know. The fifth is where a notebook starts losing: keeping a running stock figure true, by hand, while you are also serving customers, is the job people quietly stop doing after about a fortnight.