By Adam M. Trenk, Esq. | Oklahoma Horses Magazine
For the most part, the level of a business’s organization varies based on its size, scale, and maturity level. I have been consulting with Equine Professionals for more than 11 years, and have been around many facets of the horse industry over the course of my life. I have seen professionally organized equine operations on par with any medical or legal practice, and I have seen operations that fly by the seat of their pants.
Inasmuch as having organized and accessible records is to be expected of a profitable, large scale, and mature equine operation, say one involving more than twenty horses and having been in existence for more than five years, you can also predict that a disorganized operation will almost certainly never achieve its full potential.
Keeping records consistently, maintaining them over time, and having them accessible when you need them are critical components of a functioning business, and this is particularly true in the horse industry.
Regardless of your profession, be it as a farrier, horse trainer, breeder, boarding facility operator, or hauler, good record keeping practices can make or break you. Good record keeping will help you make more money, can help keep you out of trouble, will minimize the extent of any trouble that you may end up in despite your best efforts. I have also found that in larger operations the attention you pay to detail in organization naturally encourages excellence in other areas. Thoroughness becomes part of the business’s culture and things flow smoother.
On the most fundamental of levels, it is imperative to keep records that include (a) the goods or services you manufacture or provide, (b) your costs in terms of both time and money involved in bringing those goods/services forth to your clients, and (c) the goods/services you have delivered to clients, who those clients were, and what they paid or owe.
This data is generally important to make sure you don’t overpay on your taxes, and more importantly it is how you determine whether you made any money. On a granular level, your records allow you to zero in on much money you made over what period of time for each deliverable you produced or activity you performed. This allows you the ability to then redirect your efforts to doing those things which have the highest rate of return. You will also know who your customers or clients are, and have a grasp on whether or not you have been paid in full. If you are not doing this, simply put, you are not maximizing your productivity.
Records are also tremendously important from a legal liability standpoint. Every interaction that you have with a client or customer should be generating some paper trail. This may seem daunting, but once you get in the habit of it, it is easy, and it can keep you out of trouble. Literally.
The records themselves may absolve you altogether, and if they don’t absolve you, but you operate a Corporation or Limited Liability Company, proper records will keep the claimant from piercing the corporate veil and asserting claims against your personal assets.
By way of example, if you teach lessons on schooling horses, or say you own and operate the boarding facility where people ride their own horses, it is advisable to deploy an Equine Activities Liability Waiver, Assumption of Risk, and Indemnity Agreement to insulate you from liability in the event a student or boarder gets hurt riding.
But having someone sign such a document is useless if you do not maintain those records properly. You need to hang on to a copy of all such signed agreements for at least so long as it would take the statute of limitations to run on any incident the document deals with. It is for this reason that records need to be kept in a consistent manner, so that when you need them, they are accessible.
Another such scenario where records are important can be seen in the following hypothetical example. A clinician is accused by a client of theirs for allegedly failing to adhere to the terms of an agreement between them. The clinician’s client felt they were aggrieved because they did not receive the advanced training they felt they were entitled to per the contract, and thus were not granted an accreditation.
The accelerated training and accreditation was detailed in the marketing materials and referenced in the agreement the person signed when signing up for the clinic. The clinician’s position was that the additional training was dependent on their client’s aptitude and progress during the clinic, and that the accreditation had to be earned, the same way a student is not entitled to attend higher level courses or ultimately be granted a degree from a university simply because they paid tuition.
In the end, the clinician prevailed, but their defense of the allegations depended on records they had kept for past clinics. With these records, that were consistently kept in a businesslike manner and accessible, there was a long-documented history which demonstrated that attendees were not entitled to the advanced training or commendation simply because they paid for the clinic. These records allow the clinician to prevent the piercing of the corporate veil, and demonstrate established business practices proving that the decision not go beyond the basic clinic work and was not an arbitrary one.
The specific type of records you should keep depends on your personal business model. Having a system for keeping records will help keep your employees or associates accountable and on task, which generally promotes better work habits.
As noted above, basic accounting records are necessary for tax purposes and to ensure that your operational efficiency is always improving. Beyond that, any agreement entered with any customer or client should be reduced to righting and archived in such a way that you can retrieve it for reference at a moment’s notice. The old saying goes “verbal agreement is not worth the paper it’s written on.” Well, a written contract that is not available for reference at a critical time is worth just about as much!
My best advise is to work to assemble the necessary business templates, keep them at your disposal, and to have a system in place to collect and file records for all of your critical transactions.
Adam M. Trenk, Esq. is licensed to practice law in Oklahoma, Arizona, and Kentucky. He is a Partner at Rose Law Group pc (www.RoseLawGroup.com), headquartered in Scottsdale, AZ and with an office in Sulphur Oklahoma.. As an attorney he practices Equine Law, Strategic Development, Transactional Matters, Conflict Resolution, and Government Relations. He is an Avid Horseman and active in the Equine Community. Adam Trenk can be contacted by email at ATrenk@RoseLawGroup.com or by phone at 602-402-3335. Like him on Facebook at www.facebook.com/EquineAttorneys. Follow him on InstaGram @theLawHorse.