Business Bookkeeping Basics
Disclaimer: This is going to sound like a QuickBooks ad, but rest assured, I have used this program for the last year and it was a game changer. You can use any method or program you like, the four basics will always stay the same! That being said, you can use this referral link to try it out for 50% off.
Bookkeeping for your small business is very important and yet many of us struggle with it. For years, when all I had was an Etsy shop, I didn’t track anything properly and come tax time all I would do is print out a poorly kept spreadsheet, collect my bulging envelope of receipts and hand it over to the tax professional. I do not recommend this. Even if you are a very small, one person business and you think that you don’t make enough to need to keep good records I am here to tell you now that YOU DO! I’m going to break it down into four easy categories and show you how I do it.
First of all, it is 100% worth it to pay for business finance software. I personally use QuickBooks Self-Employed which you can get for $5 a month here. It is so convenient and allows you to do all of your small business record keeping via phone app or computer. I personally exclusively use the app, it allows me to input everything in real time. The $5 a month price tag is well worth it to have a business tool always at your fingertips that will allow to do our four business bookkeeping basics (say that five times fast!).
Step 1: Track all income. Whether you make $500, $5000, or $50,000, you should be tracking every bit of what your business makes. With the QuickBooks app, all you have to do is type in the information regarding the income, snap a photo of the payment, and voila, you’re done. If you’re really fancy, you can even send and receive invoices and link your bank account so all your transactions are added automatically.
Step 2: Track all business expenses. Office supplies, maker supplies, business lunch with a client, marketing materials-- all of these things are business expenses that you should be keeping track of. This is crucial to your taxes as business expenses are tax deductible. The QB app even allows you to snap a photo of your receipt so keeping a messy envelope of paper ones becomes unnecessary.
Step 3: Track all of your business related mileage. As a pet sitter, I accumulate A LOT of business miles. My whole job is driving to and from each appointment and the clients house. This is also important for your taxes as you get a mileage deduction. Yay! You should be logging your trips to the post office if you’re a store, mileage to and from meetings, your trips to see clients, any driving you do for home parties or shows, craft fairs, supply runs-- it all needs logged! Come tax time you’ll thank yourself. And yes, you guessed it, with the QB app you can use your phones GPS to start and stop your trips or enter them manually.
Step 4: Pay quarterly taxes. If you are self-employed you need to be paying your taxes. There is no employer taking money out of your check for you so you assume full responsibility. Even if you don't meet the requirement (click here to see IRS quarterly tax requirement) for being required to pay quarterly, it is still a good idea to keep you from owing money at tax time and being caught off guard. With QB and other similar software, this tax payment is automatically calculated for you based on income, expenses, and mileage. That is why those three things are key!
I know this topic is not fun by any means, but it is the basis for your whole business and therefore very important! I know it seems like common sense to some of you, but for someone just getting started or someone who has no prior experience with bookkeeping, these basics are key!
Yours in Business and Motherhood,