I realized pretty early on in my business that I am the worst bookkeeper. And every year that tax season comes sneaking up on us I am reminded of this fact. It took me a while to get a handle on the mess of documents I refer to as my “books” but over time I’ve garnered a number of tips that have helped me become a better bookkeeper for my little solo operation.
Track Your Cashflow
First thing’s first, track your cash flow. Everything that goes in and out, specifically of your business account, needs to be accounted for. This does not have to be terribly challenging (despite the fact that I continuously made it challenging), you can essentially do it on a spreadsheet or even in a handwritten notebook… if you really want to.
When it comes to the money that comes in, I’m told that you essentially need to track three things:
- How much money you collect
- When you collect the money
- From where did you collect the money
I personally also make note of any fees I pay (i.e., PayPal, Stripe, etc.) along with a copy of the invoice I issued and the date that the work was completed.
When it comes to money that goes out, I’m told you essentially need to track:
- Who the money went too
- How much money there was
- Why you gave them this money
You should also keep all of your receipts. I personally also note what project(s) all of my transactions are related to or if they are general business expenses.
The above works for me, but if you’re struggling with it make sure to consult with a professional bookkeeper or accountant.
Save Money for Taxes
Working for you means that you don’t have an employer handing over money to cover your taxes to the government. You are responsible for your taxes, and you need to make sure that you can cover them. Taxes vary state-by-state and depend on whether you also pay federal taxes — none of which are questions I can answer for you. But I personally put away about 25 percent of my total intake, and from what I gather on the web, this 25 to 30 percent seems to be fairly standard.
Again, if you can’t find the proper information regarding this, I can think of someone who could probably answer if for you… an accountant.
Separate Your Accounts
Managing the books for your business can be a real challenge if your personal and business accounts are one and the same. Most business advisors that I know recommend separating accounts as soon as you can, and from experience, I second this! I started out using my personal bank account as my business bank account (and my personal one too) and man if I think my bookkeeping is bad now…
Most banks have really reasonably priced business accounts. You can also use the opportunity to shop around and try out another bank, in case you’re not enjoying your current service (I’m looking at you former account manager Matt*).
*His name isn’t really Matt.
Use an Accounting Program
If you’re talented at technology or not talented at bookkeeping, I humbly suggest finding yourself an accounting software that meets your needs and can lend you a hand. Note that having accounting software is not some magic solution. If you’re not sure what system is right for you and need time to decide, you can start out using a spreadsheet.
What makes accounting programs a great addition to your overall business mix is that they can track your incoming and outgoing transactions and code them for you, that way all you have to do is review the transactions (and occasionally re-code them).
Schedule Time to Organize Your Books
Your books are not going to organize themselves, trust me… I tried this method. And if you leave it too long between your organization times then managing your books can be a real task. So put some time on your calendar to organize your books (and actually do it) that way, your road to becoming a better bookkeeper isn’t so long and dreary.
What tips and tricks helped you become a better bookkeeper for your business? Share them with me in the comments below!
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