TO KEEP ACCOUNTS OR NOT: DOES IT MATTER FOR SMALL BUSINESSES?

Small businesses often run without organized record keeping although it has been identified as one of the basics of management. This is a review article which synthesized both theoretical and empirical literature in order to investigate the interaction between record-keeping practices and the performance, survival and growth of small enterprises. The review utilizes the publications published after 2010 and proves that timely and accurate records are the keys to informed decision-making, proper financial management, availability of external financing, adherence to taxes, inventory management, and strategic planning. Nevertheless, small businesses, especially micro and informal businesses in developing economies, still experience a consistent set-back to sound record-keeping, namely low financial literacy, manual systems, use of limited resources, technology and poor enforcement of regulations. The article also examines how the use of digital record-keeping devices and cloud-based accounting systems are increasingly playing a role in alleviating such challenges though noting the challenges surrounding the cost, skills, data security and readiness to adopt. Policy implications and practical recommendations are provided and these are training and capacity building, standardization of record-keeping tools, incentives to comply, and public-private partnerships to encourage digitalization. The review makes the conclusion that record-keeping is not just an administrative activity, but rather a strategic capacity and conditions of resilience, competitiveness and sustainable growth of small businesses.