How Excessive Paperwork Can Stunt Small Business Growth

Small businesses help fuel the nation’s economic growth. Small business owners are already busy juggling plenty of challenges. Between tasks such as managing employees, keeping tabs on the industry, and striking a balance between operating expenses and turning a profit, small business owners have their work cut out for them. The last thing any small business owner needs is to heap on an unnecessary burden – such as excessive paperwork. While creating and maintaining employee and financial files, forms, and evaluations might be cautious, overflowing paperwork and process can choke businesses of a certain size.

small business owner paperwork

Streamlining/Automation Saves

Some paperwork, of course, is necessary. If you didn’t have any, you’d have no records of employees, productivity, or finances (not to mention you’d be violating more than a handful of laws). But, as with everything in small business, automation, streamline, and prioritization is key.

Taking the time to involve an accountant and an attorney early in the processes of startup and growth is important. Finding and keeping in touch with these advisors at an early stage can help you understand exactly what documents you need to set in place and help automate the process of documentation and record keeping. Not to mention, it helps decreases the chances of running into expensive and time-consuming employment law or tax issues down the road.

Keep It Simple

In 2012, the National Small Business Association (NSBA) conducted a taxation survey. They uncovered that 64% of small businesses – more than half – spent upwards of 40 hours in a year, just doing federal taxes. That’s a full week’s worth of work. More alarmingly still, a healthy 28% reported spending a whopping 120 hours per year or more – that’s three weeks of work. These figures, while grim, are perhaps not altogether surprising – after all, the United States tax code is notoriously labyrinthine.

The good news is, once a problem is diagnosed, there is hope for treatment: in this case, enlisting the assistance of an accountant is important. It’s true that not all small businesses have the budgetary wiggle-room to hire an accountant, particularly if early in startup-mode. But if possible, an accountant can be a huge time-saver in the long-term. Imagine if the businesses surveyed had that one week or those three weeks free. They could be generating profit instead of tax paperwork.

Remember, that it is important to consult an accountant in your own state, but a common timesaver that many small businesses use is by integrating accounting access to important tax, timekeeping, and bookkeeping documents or software. Many software platforms such as Quickbooks have an option where you can grant your accountant real-time access to your records.  This can help reduce the need for correspondence and the exchange of additional records between the parties.

On the legal side, your attorney should be able to explain what processes are necessary and help you put together a packet of materials for each situation you need documentation of.  As mentioned earlier, firing, hiring, and discipline of employees can be documentation-heavy processes, but there are other processes where it might not be as apparent what records must be maintained. Healthcare, OSHA, environmental (depending on the industry), and regulatory compliance (again, depending on the industry) documentation can be described as ‘involved’ as best. An experienced attorney in your state can help you navigate these areas. It is again important to speak to an attorney early in the life of your business to plan for what documentation is necessary immediately as well as down the road.

 

Resources:

Important Employee Documents

In addition to an accountant, an experienced corporate or employment attorney can help guide you through the process of determining what’s necessary and streamlining processes. It also helps to have an administrative documentation process for the hiring, discipline, and firing of employees. This can help save time as well as ensure that you are thorough in your record-keeping. You should consult an attorney in your own state, but here are some links to generalized lists of employment documents that are important:

Important Financial Documents

Here are some links to lists of important financial documents that a business must maintain. Remember to check in with an experienced accountant in your home state.

 About The Author

Charlie A. Mayville is the marketing director for Berkowitz Klein LLP, specializing in breach of contract and business debt collection cases.