Why you NEED an accounting system
Updated: Jun 14, 2019
Getting your business organized like a boss!
Hello creative business owner!
Do you like the sound of that? Business owner! Being your own boss, creating and selling what you are passionate about. You can’t believe you actually took the plunge but now your terrified of how to make it all work.
Or how about this one, you are KILLING IT in your business but come the beginning of the year you are terrified about the dreaded tax man. How are you going to get everything organized in a somewhat professional manner and how much are you going to owe?
Sound familiar? I'll let you in on a little secret.....
You NEED an accounting system!
Now if you are just starting out, you don’t really need to go all out and jump into QuickBooks or Xero or some other overwhelming accounting program that does more than what your company needs. A simple spreadsheet will do. You just need some sort of system where you can track the money that comes in and the money that goes out.
If I can give you one piece of advice, ok maybe 2 pieces, to help make your life easier and your tax preparer’s life easier is:
Number 1 – Keep all your receipts and organize them. Write a small description on the top to remind you what it was for.
Example: The receipt from a craft store for beads, write “beads for jewelry” on it and put into an envelope until you can enter the expense into your spreadsheet (or official accounting program). You are responsible to show proof of your expenses should the IRS come a knocking.
Number 2 – Enter your receipts into your accounting system at least monthly. So, you bought your beads now all you need to do is enter in the date, place, cost, and description of your receipt into your spreadsheet (or program). Make a checkmark or some other mark on the receipt to remind yourself that you have entered it and file it away.
BONUS POINTS: If you have a scanner, scan that receipt and save somewhere digitally (I use Google Drive for most of my stuff). This will help against the disappearing ink receipts tend to have.
See not too hard to keep organized. Set up a filing system for your receipts so they are easy to refer to later, especially at tax time. Your tax preparer may have questions and the quicker you can find them, the less stress!
What about all that money you are raking in? You guessed it, enter that into your spreadsheet too! Whichever way your income comes in (PayPal, Etsy, Square, bank deposits, whatever) make sure to print out your reports to show the money from the sale and the money going out for the fees. Your fees are part of your expenses too. Save those reports and put with your receipts so everything is together.
My preferred method of receipt organization is to group everything together by month. I suggest you get a small accordion file folder with 12 different dividers and organize everything per month. That way you have one file folder for each year. Plus, it’s easy to just grab and go when you go see your tax professional.
At the end of the year, once you have all your receipts entered for expenses and income, take that spreadsheet and your receipts with you to get your taxes done. Your tax person will ABSOLUTELY LOVE YOU!
If you are still feeling overwhelmed by the idea, or just don’t have the time to sit down and organize everything? I am here to help! Schedule a FREE introductory call with me and let’s work together to get your business organized.