Bookkeeping tips that will make you a better business owner

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Starting a business and making money on your own time, your own terms, and your own schedule can be seen as the ultimate dream for a lot of ambitious entrepreneurs.

Ambition can provide a lot of fuel to your business and help you success as a business owner, but ambition doesn’t guarantee that you’ll succeed.

Dreaming about making your business soar and making that a reality are two completely different things.

For one, you need to have a business plan set into action.

Without a plan, how will you navigate through your business venture?

Secondly, you need to be able to take a hard look at your numbers to see where you and your business stand.

This is where good bookkeeping habits come into play.

I mean, if you don’t know how much you’re spending, how much you’re making, and how much to set aside for Uncle Sam, then how can you expect to grow and thrive in your business?

I’ve seen this all too many times: creative and ambitious people starting a business with the dreams to make millions and set themselves free of the corporate world.

While there’s nothing wrong with that, all too often I also see these same creatives struggling when it comes to tax season.

They are either blindsided by how much they owe to the IRS or they have no idea where to begin to collect their tax information – or both.

This is a serious problem if you’re wanting to be a serious business owner.

And as a creative person myself, I completely understand this disconnect and struggle. Been there, done that.

But thanks to a few hard lessons (and a financially savvy husband), I can confidently say that I’ve found a way to secure and prep myself and my business for tax season, without scrambling and stressing at the last minute when it comes time to visit my CPA.

So, from creative to creative, here are my BEST bookkeeping tips that WILL make you a better business owner.

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Setup separate bank accounts & payment gateways

Nothing can be more messy than trying to cull through your business expenses, sales, and payouts from your personal bank accounts.

Not only is this messy and will create more work for you, you’ll be in a bit of a pickle if you happen to be one of the unlucky few to get an IRS audit.

So, to make it easy on yourself, and open up a new checking and savings account for your business.

This could be done at the same bank you are already loyal to, or you could take the separation a step further and open an account at an entirely different bank.

That is what I prefer to do – there’s no mistake that the money going in and coming out of my business account is strictly for business, and vice versa for my personal accounts.

I know it can be a pain, but take the time to setup these accounts NOW – you & your accountant will thank you for it come tax time.

Use a detailed spreadsheet

You don’t have to be a bookkeeper to keep your own financial records. This can simply be done with a good, ol’ spreadsheet.

Or, if you prefer paper, you could even keep a written ledger with all of your information – just be sure to keep it very detailed and make sure you also have receipt copies of your purchases and expenses.

This is the easiest way to record your financial data when you aren’t financially savvy.

And if you don’t know your way around Mircrosoft excel or Apple numbers, then investing in a solid pre-made spreadsheet might be your best course of action.

Whatever path you decide, make sure that you are keeping detailed records of your income and expenses.

Having separate areas to record different streams of income is a must.

You should also get into the habit of writing notes with dates along with your numbers to outline exactly where the transaction came from and when.

Don’t try to go through the fiscal year without recording your financial data – you’ll end up hating yourself if you do!

Update your books weekly

I cannot stress enough how vital this bookkeeping tip is!

If you aren’t very savvy when it comes to finances, then I must encourage you to update your spreadsheet every single week, preferably on the same day.

For instance, I run my financial weeks from Monday-Sunday, so each Monday morning I record my data from the week before.

I make sure to include all of my sales, affiliate sales, taxes collected, taxes to set aside, and any other random financial data I have to record.

This not only helps me stay on track with my books, but also gives me an instant insight to my financial details, records, and goals I have set for the month & year.

It’s very eye-opening when you know how much money is coming and going in your business every step of the way.

Not only does this give you more control in your business, but it keeps you accountable and on-point to reach your financial goals along the way.

If you’re spending too much, you can assess how to cut back or how to improve your sales to level out the imbalance.

This will also help you come tax season.

With knowing how much money you are making, you have the power to set aside the appropriate amount to save for paying your taxes.

At the beginning of each week when I record my data, I also make sure to set aside enough money so I can pay my taxes quarterly.

Doing this, I don’t have any surprises when I visit my accountant and hand over a check to Uncle Sam!

Hire a pro to help you

While you can certainly do the day-to-day record keeping for your business, I highly encourage you to entrust a professional for the final cut before sending over your information to the IRS.

This provides you with four key benefits:

Ensures that your records are double checked by a numbers professional.
Puts your mind at ease that you are running your business the way you should.
Helps you in the long run by getting all the latest tax breaks, credits, and write-offs appropriate for your business. Tax laws are always changing, so it can be a lot to keep up with if you don’t hire a professional to help you.
Makes you less susceptible to a tax audit. When the IRS views your tax returns and notes that it was filed by a professional, it will have a lesser chance of being flagged for an audit.

I’ve chosen to entrust a professional in my business and it’s been the best decision and investment yet.

Not only can a certified professional help you with filing you taxes, but you can also gather sound advice on business related questions and proper legal setup – if you need that.

I cannot stress enough how important this is for you and your business – skimping out on a professional could be more costly in the long run if you happen to get audited and your financial records are false or incomplete.

Keeping your books shouldn’t be complicated (and if it is, then it might be wise to take it a step further and hire out a full time professional) and many financial pitfalls can be avoided when you follow these simple bookkeeping tips!