You started your entrepreneurship journey. You have your business plan, your marketing plan, and all the other plans. One thing on top of every business owners mind is their finances. How do you plan for a profit? What is your do’s and don’t’s when organizing, planning and managing your finances? My Cats and Me have 7 bookkeeping tips for you to hit the ground running.
- Separate your personal from your business: This is our number 1 rule. And will make your bookkeeping, accounting and tax season less of a hassle. It can be a separate personal checking account. It can be a brand new business account. The credit card? Yes, have one dedicated for your business (again, a separate personal or business card). My recommendation is to open Business Accounts.
- Have a realistic budget: When starting a new business, it’s common for the business owner to invest money on it. We call it “Equity”. But if you need to use your personal funds to cover your business expenses too often, it’s time to revisit the budget. And your expenses.
- Track your expenses: And keep the receipts. This is the best way to maximize your business deductions and to see where your money is going.
- Track and record your income: This is important. Make sure you’re recording all your income. You’re marking the invoices paid as “paid”. You are accounting for the correct amount paid. You’re considering any and all transactions fees. And don’t forget to follow up on any unpaid invoices.
- Set money aside to pay for taxes: Yes – the dreadful tax season. For a small business owner, paying taxes can affect your cash flow greatly. We recommend you put aside around 30% of your profit to cover for taxes. If you know you’re on a higher tax bracket, feel free have your taxes at a higher rate.
- Pay yourself: You heard me right – you gotta pay yourself. What would you pay for someone to do the tasks you’re doing. And pay yourself (also, consider accounting for tax monies). Because you deserve it!
- Ask for help: Outsourcing your bookkeeping can actually save you money! From the time you’re getting back, from the clear understanding of your finances and help with tax season. A bookkeeper can be a lifesaver!
- Track your time: Yes – we can feel it takes us a million hours to write a blog when it takes us 30 minutes. We can feel like we’re spending 20 minutes scrolling on Instagram but you’re actually spending over 3 hours a day. Yikes! track your time and cut off distractions.
- Have a contract: If you’re a service provider, make sure you have a contract in place. This will protect yours and your clients best interest.
- Set realistic timelines: You don’t want to be scrambling to accomplish your deliverables. Be realistic.
- Give open-ended dates: Delivering something by the end of the week gives you more leeway than by Thursday. Give you the grace of time.
- Listen: really listen to your clients. Understand what they need. Know where they stand. By just listening, you’ll learn about your client and be able to serve them better.
If you have any additional tips or questions – leave in the comment below.
We can’t wait to hear from you and see where your journey will take you.