Today I’m so very excited to be introducing you to my first guest blogger. Not going to lie, I scheduled this post ahead of time because I’m enjoying our first family holiday in Queensland.
Rose Taylor from Biz Mama Books is here to share her tips on keeping your biz finances simple. Find out more about Rose at the end of this post.
Bookkeeping you say… does that word make you want to cringe or run and hide? Are you overcome with uncomfortable feelings like guilt or fear at being behind and not being across your finances? You’re not alone! Many business owners feel overwhelmed, frustrated or embarrassed about not addressing their record keeping and business figures. It doesn’t have to be that way. It doesn’t have to be hard; you CAN overcome these blocks. Keep reading to learn my top tips on how to move past these blocks as well as some common mistakes to avoid.
Stay up to date
Keeping up to date with your record keeping is critical. Leaving your records till tax time not only increase your stress, it does not enable you to understand where your business is heading and hinders sound business decision making and growth.
The solution is putting in place a simple, efficient system for staying on track. If you are working with a software package such as Xero it can be as easy as connecting to your bank account, so all your numbers automatically populate, and you just ensure they are in correct category. If you’re using a spreadsheet it means having all of your latest income and expenses entered in consistently.
Schedule a time in your diary and don’t cancel it
I’m hoping that if you are in business you use some form of either paper diary or digital calendar/scheduling. You need to book in updating your finances like an important appointment that you wouldn’t cancel. Have a weekly and monthly block of time set aside and a goal of what you will do.
I suggest entering all income and expense weekly and then at mid-month or month end having a review session analysing how you are tracking towards your business goals. This is where running reports come in.
As you implement the systems you will get to know exactly how much time is needed to complete the tasks which will also reduce as you get more familiar with what’s required.
Get set up on software
To make your bookkeeping quick and easy you need an efficient system. The less steps and repetition the better! I highly recommend using accounting/bookkeeping software as this is the quickest, easiest and most accurate way to go about it.
The shoe box under the bed system might be quick during the year but it doesn’t serve you in making the most of your business. You have no idea what your figures are and no easy way of finding out. You could miss out on tax deductions by forgetting your expenses and end up paying a fortune for the Accountant sort it for you at the end of year to lodge your tax. Not being on top of your numbers could also cost you in other ways such as to identifying which products you may be losing money on until too late.
Spreadsheets can also have a place, if you are using the right template and keeping it up to date. I recommend this strategy only for the early stages of a business, before you have several clients or sales.
Software such as Xero, QuickBooks Online, Wave, MYOB etc. reduces complexity, admin time and possible complications from mistakes.
They are pretty much all in the cloud these days so you can log in from anywhere and many providers also have a phone app to make it even easier. You can have any report at the click of a button to tell you all of your numbers that you need to know. You have your bank statement feeding into the software so half of the data entry is done for you and all you need to do is pick which income or expense category it should go to.
You can even set up rules so that recurring transactions you have every month can be already marked to a category. Payment services like PayPal and Stripe also integrate for people to pay invoices from the accounting software and they can be linked up just like your bank account to allocate transactions.
Ensure you still keep all tax receipts (in a file or the cloud if they are stored securely). Make sure you keep it simple and efficient and file when entering into your software or spreadsheet.
Some common mistakes to avoid
There are some common mistakes that people make when doing their business finances and one of the biggest ones is not having a separate bank account for the business. The idea of a business account is that all income and expenses relating to the business goes through that account and you don’t miss anything. There are many other reasons that you need a separate account, including time saving so that your bank feed isn’t full of personal transactions that you have to match up and understanding what you have to spend for business vs personal use.
Another common mistake is thinking that paying yourself a wage when you are a sole trader is an expense and a business deduction. This is only the case only for a company. When you are a sole trader the ‘profit’ is your wage and becomes part of your taxable income and needs to be managed and recorded accordingly.
A third common mistake is doubling up on income and transfers from sales portals. You must ensure that when money is transferred between bank accounts or from places like PayPal that you are not doubling up on counting the income and that transfers get treated as a transfer in the software rather than coded as a new sales amount. This could severely skew your numbers if left unchecked.
Managing your business finances doesn’t have to be boring or difficult. Stay on track with implementing a system that works for you and have a play with the reports and set yourself some goals. When you meet goals go and celebrate and treat yourself.
Work on your money mindset and invest in yourself
So now that we have removed the overwhelm and avoidance let’s talk about money. Money is a beautiful thing and it makes the world go ‘round. Don’t let any negative feelings or stories you have around money get in the way of you managing your business finances.
Knowing your numbers allows you to plan, budget, forecast and manifest what you want for your business and the impact you want to make for your clients. Serving your clients is fulfilling your purpose and solving a problem for them. The more money you make, means the more people you can help and serve.
Managing your finances allows you focus on things like investing in yourself and your skills with courses or outsourcing to then in turn serve your clients on an even higher level.
Book in a 20 minute complimentary review of your finances with me today so you can start knowing your numbers and making empowered business decisions.
Who is Rose?
Rose Taylor is a Registered Bookkeeper and BAS Agent who holds a Bachelor of Business Management Degree. She has 10 years of experience in finance across multiple industries. Marrying her love of numbers and her passion for empowering other mum’s in business, she founded Biz Mama Books. Using her own business as her vehicle she educates and enables women to interpret and love their numbers, and use them to build the business they dream of.
Rose, I absolutely loved reading your tips. You know I’m one for locking down time to do things, and you’re right, locking in time to manage your books and finances is so important!
As for software, I use Wave Accounting as I don’t have the money (yet but I know I will) in Xero. It’s saved me so much time and keeps everything in order.