Tips to Figure Out Finances for Your Small Business
Because it’s Tax Season, and I get all “numbers-y” this time of year, I wanted to talk about my least favorite topic: finances!
But it goes hand-in-hand with my most favorite topic: money!!
I coach new entrepreneurs and always ask in our initial convo if they’ve thought about how they’ll be doing their business finances.
Vague question, I know, but I keep the question vague because I don’t want to embarrass anyone when they say, “Shit Kristi, I have no f’ing idea.”
Because that’s usually the answer. Especially from creative people.
I get it: I don’t want to be an accountant, I just want to create something I’m passionate about.
When I opened my first business, I didn’t organize my books for 6 months. Partly because I was afraid of the mess I made, and partly because it’s not fun.
And just to be clear: I’m quite nerdy & am actually very good at math so it wasn’t because the math scared me, it was because I didn’t really want to own up to how little I was making.
Until I realized that without knowing my numbers, I wouldn’t make A DIME.
So now I have a monthly plan for how I run my books. Monthly because honestly, I f’ing hate doing the books and I will absolutely NOT do it more than that.
Here’s where to start:
Get your own business bank account.
Not only because ya know, commingling. But once you separate your personal account from your business account, the level of seriousness in your biz will drastically increase. It’s a badge of honor, if you will.
If you want to have a real business, your business needs it’s own account. Simple.
(P.S. Bloggers, I am basically talking to you here!! I know we all say, “I want to be a full time blogger one day.” Well, Get On It & treat your blog like a business!)
But besides the strong need to mentally separate yourself from your business, it makes the rest of your life a helluva lot easier.
Every single transaction you make for you biz will be all in one place (that’s what accountants like to call expenses!!) so when you go to your spreadsheet or Quickbooks etc you will just have to pull up your bank statement.
But FYI for this to work you MUST STOP going to Walgreens and buying office supplies & mascara & a pack of gum. That’s officially a no-no. Separate business & personal on separate cards.
There are plenty of software for you to use to track business expenses, Quickbooks being my fave. The best feature to look for is the ability to link your bank account so it automatically categorizes your transactions. It’ll save you tons of time.
That was my process for about 2 years. And then I got lazy.
I stopped checking the categories. I just trusted the system.
If it categorized Walgreens as office supplies instead of advertising, I didn’t catch it nor did I really care because, meh. Close enough, right?
Because I didn’t really have any idea how much I actually spent on supplies vs advertising vs anything else.
And eventually that made my head spin. It was SUCH a mess.
So now I manually enter everything and I created my own spreadsheet in Google Drive to do so.
It takes wayyy more time, but ya know what? It also hurts more. I am very aware of every transaction I make and also what category it falls into.
And the beauty in that is I am also very aware of where I can cut back.
Now that I have a laser focused idea of my monthly numbers, I’ve found that one of my strategies for creating more profit is to stop spending so much damn money.
Because when my business brings is $20,000 and I spent $19,999, I just worked my ass of to make $1.00. Woof.
Controlling my spending — and frankly just being aware of my spending habits — has been the #1 benefit of taking charge of my books.
If you want my swipe file for my Profit & Loss, I’ll share it with you! Sign up here so I can email it to you.
How do you organize your books? A spreadsheet? An app? Share some of your master tips in the comments & maybe we can all help each other out!