Setting up a record-keeping system

Good record-keepng matters because it helps child care providers stay organized, track important information, and ensure the safety and well-being of children. It also supports clear communication with families, makes it easier to meet licensing and regulatory requirements, and helps programs run more efficiently. 

It also helps you understand what your business needs to run by giving you clear, organized information about daily operations like enrollment, staffing, expenses and family needs. You can use your records to spot patterns, identify gaps, and make informed decisions.

You should save all paperwork related to your business, including licensing and regulation documentation. 

Some other records that are helpful to keep, depending on your organization type. For larger organizations, you might need a depreciation schedule. Nonprofits or corporations with a Board of Directors should keep meeting minutes, documentation, and incorporation paperwork. 

Start by listing different types of documents you have for your business. Some common examples include: 

• State and federal tax forms, returns, supplemental information 
• Communication submitted to the IRS
• Employee names, addresses, and contact information
• Employee timesheets
• Employee paystubs
• Bank statements
• Insurance documents
• Contracts, including loans and mortgages
• Purchase receipts
• Customer invoices
• Financial statements
• Business registration documents
• Licensing records
• Board of Directors meeting minutes (if applicable)
• Legal files
• Emails 

Keep all business records for at least three years. Depending on the type of record, you may need to keep it longer. It's a good idea to keep all tax records for up to seven years, especially if you claimed a loss on your taxes.  

Accounting documents, like invoices and checks, should be kept for five years. Payroll records and time cards should be kept for three to seven years. Nonprofits or corporations that have audit reports should keep those records indefinitely. Annual statements should be kept indefinitely. 

It's helpful to create a record retention schedule outlining how long you're keeping each document, like the following example: 

Sample Record Retention Schedule (depending on business-specific requirements) 

Use your list of documents to write down how long you'll keep documents in each category. 

It's a good idea to have at least two sets of records to keep at your center or home (if that's where your business is), and another set at another location. You could also keep one set of paper files and store the other digitally. Regardless of what you choose, digital records are good to have in case you lose the paper ones, and they're easy to share by email. Paper copies protect against technology failures. 

Digital records 

Setting up digital records is as simple as saving digital copies or photos of your documents on your computer. You can also save copies in a cloud-based system, which are generally free to use. You can also email yourself with the digital files attached to the message. Whichever system you choose, make sure to use a clear labeling system to find files easily. For example, label folders on your computer or cloud drive with the type of document you are storing in each folder (tax returns, paystubs, etc.) and label individual documents with the year. This helps you quickly find specific documents when you need them. 

Paper records 

A paper system needs to be organized and labeled so you can find your documents. Consider these tips and tools for a paper-based system: 

• Group loose papers together for organization in file folders and label each folder with what’s inside.
• Keep numerous file folders together in a hanging folder and label what's inside.
• Store multiple hanging folders in a storage cabinet which come in a variety of sizes and can be locked for security when not in use.
• An accordion folder opens like an accordion to reveal separate compartments for storing documents. Each compartment can be labeled.  

Records index 

In addition to having at least two sets of records stored, you should also have an index. An index is a way you can easily look up, find, and reference your files. This could be a file folder system with each section labeled. For more complex records, you can create an index on a spreadsheet, indicating where each important record can be found. For example, your payroll may be in QuickBooks, but maybe you also have a printout of payroll in your home files as well. This helps you find your files when you need them and makes it easy for someone else to locate them information in an emergency.  

Data privacy protection

Remember that key records and data like social security numbers and addresses need to have privacy protections. Lock up sensitive information kept on hard copies. There are options to lock digital files with password protection or to use multiple encryption technology on cloud servers. Whether your files are on paper, on your hard drive, or in the cloud, add the amount of protection you need to mitigate the risk of a data breach. Minimize the number of people who have access to this information. 

A record system is only useful if you continue to maintain records and use the system that you set up. 

Get in the habit of filing 

Decide when and how you'll file your records. Some business owners may file records right away while others may collect records and file them weekly or monthly. Whatever you choose, get in the habit of filing your documents and updating your index to keep your system up-to-date and complete. 

Set up a "tickler" system 

Your filing system does more than maintain historical records. You can also use it to prepare for upcoming events with what is called a “tickler” system. You create a folder, either digitally or in paper folders, that has upcoming activities or to-do's by month or quarter. For example, you may have a tickler folder for June that tells you it’s time to send in your quarterly taxes and includes an estimated tax form. You could also have a folder that you rotate once a month to remind you of bills to check, upcoming renewals, or necessary call-backs. 

Create a backup 

Whatever record system works for you, plan to regularly maintain or backup your important information. For example, if you keep two sets in separate locations, you could also print paper backups of the digital records you have. Or if your financials are in QuickBooks or you are using a CCMS, we print out key information at least once a quarter, if not more often. It may seem like a waste of paper, but it’s important to have these records accessible and up to date. If there's a problem with your computer or the cloud system, this would ensure you have the data you need to perform your business activities. These systems do not have to be complicated, but they are necessary. 

Write down the records you want to keep, how long you'll maintain them, and how often you want to update them. Create a simple log to help you organize your record-keeping system as you get started like the one below: 

In some cases, you may not have the availability or comfort level to handle your records on your own. If needed, there are additional options available to support your business record-keeping. 

Hire outside help 

Some businesses hire a bookkeeper to manage their records. Most small or new businesses don’t have the ability or funds to hire a bookkeeper, which means having a record-keeping system you’re comfortable with is important. Even if you hire bookkeeping support, it's still important to stay involve so you understand your business finances, maintain accurate information, and can quickly address any issues that arise.  

Bookkeeping software 

Applications and software are available to help business owners maintain their records, from invoicing and tracking time to paying bills. If you're thinking about adding bookkeeping or accounting software to help with your records, here are some considerations: 

• Look for applications or software that have features that meet the specific needs of your business
• Take advantage of trials or demos to find platforms you are comfortable using and are easy to navigate
• Consider the benefits of something that’s accessible on a mobile device or by staff members
• Find the tools that fit your budget and cash flow, now and in the future 

Disclaimer

The information contained here is for educational purposes only and is not intended to constitute legal, tax, or financial advice.