How To Leverage Bookkeeping For Your Business Success Part One

Did you know that bookkeeping is an absolute must for your business? Probably, most people know that there are only a few certainties in life like death and taxes. Many believe that the importance of maintaining business finances is mostly due to the certainty of taxes. Taxes are a big part but it’s not the whole picture.

Over the next three weeks I will be going through a three part series on how to gain value using simple bookkeeping strategies. I will teach were best to look for cash availability, how to save time by using reoccurring options provided in your software, and lastly, how to evaluate the health and possible future of your business.

Lets begin by learning how to review your available cash. It can be tempting to do a quick glance at your bank statement to see what your balance is. Once you see that number it’s easy to hit click-to-buy. Checking your bank account for cash flow evaluation versus using the tools provided in your software actually prevents you from seeing the whole picture and risks making business decisions that will lead to disaster at some point.

Instead, try using the budgeting tools in your accounting software like an envelope system. Make sure you have all the categories set up in a way that will make your CPA’s life easier and allow you to evaluate essential pieces in your business. Then select the expenses or profits you want displaying in your dashboard. Now you are able to see the heart of your finances: what is being spent, where it is being spent, and how much you have left to allocate. You are leveraging bookkeeping to save you money, keep you on track, and become creative in your business strategies.

See you next week to learn more on how to leverage bookkeeping for your business success. 

Megan Goodall

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Bookkeeping Best Practice For Freelancers

As a freelancer, whether a coach, marketer, copywriter, programmer, strategist, or expert advisor your schedule is packed full of incredible things. All of this can be overwhelming and exciting. Things that are not as interesting get pushed to the side, while others that bring a tingle of thrill get thrust to front and center. You love what you do, that’s why you do it. You are good at what you do, that’s why you love it. Your business is rolling in cash, because you are good at what you do. That is wonderful! That is, living the American Dream.

Still, there’s this nagging thing waiting for you at the desk. There’s this confusing thing glaring at you as you give your meanest, and best, blank stare.

It’s called finances. Bookkeeping. Accounting. TAXES.

Every business has finances including yours (I know basic, bare with me). In order for your business to function: you receive payments, pay bills, pay taxes, cover expenses, make sure documents are in order, blah blah blah. Ugh finances.

Here’s some relief, I know freelancing and finances. I am going to help you get a handle on things. I am going to help you understand the importance of a bookkeeping system. If you stick with me, I’ll guide you through some of the best practices for your industry, help you create a more productive system, and try to ease your burden just a bit through knowledge.

So, lets begin with a quick and simple discussion on 5 tips for managing your books.

1. Separate Bank Accounts

I cannot stress this enough. In order to have best practice in any business, it is essential that the business account(s) and personal are not mixed. Mixing the two accounts can create confusion on expenses and received pay. This potentially can result in missing out on deductions come tax time, or getting hit with unexpected taxes after an audit. Mixing accounts also hinders your ability to truly know or understand your cash flow for the business.

2. Do your books in the cloud

If you haven’t already, sign up and get your system started by using a cloud based accounting software. I personally recommend Xero another great option is QBO (Quickbooks Online). Accounting software streamlines the bookkeeping process by automatically extracting information from synced accounts. This allows you to track and categorize things without having to do manual entries (saving you time and money).

3. Create an organized system

Set aside time each week to do your books. Don’t allow yourself to put it off. If you fall behind it can be difficult to catch back up. Create rules within your accounting software to optimize the speed of categorizing your transactions. Hiring the right bookkeeper can make all the difference in your business.

4. Offset your expenses against tax

Rules can vary from one country to another, be aware of this if you travel outside of the US for your jobs. Typically you can offset things like: travel expenses (usually not to and from work this is considered commute), power & utility bills, internet & phone bills, items such as a computer, printer, and phone, office rent including room in your home, client entertainment (some restrictions apply) and others. Be sure to record all of these details when you are doing your bookkeeping. In most cases you can only offset portions of your expenses. For example you can offset a portion of your home for your office but not the whole home.

5. Make a budget

Part of staying organized and planning your business’s future is through a budget. Budgets are often thought of as limiting, unnecessary, and dull. Budgets actually act as a guide, providing you, the business owner with a framework to make clear-headed decisions for your business. Use a budget to make adjustments when and where necessary.

As a freelancer, it is easy to loose sight of the big picture when you are working with multiple clients. Remember, bookkeeping is a vital part to your business. It helps you plan, track, and manage all things financial, which is the very foundation to every business. With good bookkeeping you will have a clear idea of your cash flow, income, expenses, and business growth.

So take control of your books or outsource to an expert. Having a good system in place will only benefit your business growth and profitability. 

4 easy ways to verify your bookkeepers work

You have an AMAZING bookkeeper that you adore. He or she is so good, that you’ve let go completely of that area of the business and put your head in the financial dark. Here’s the problem. Your bookkeeper may be the best, but they are human. Just like you and me they make…

mistakes, gasp!

I know right?

Okay go easy, because of the way your bookkeeper is built (I mean a crazy detail oriented person obsessed with number perfection that gets a slight high when those books are balanced), he or she does not intentionally mean to make mistakes. Like I said earlier they are human, sometimes mistakes happen. 

You outsourced bookkeeping so you could have accurate reliable financial information. You want to know your cash flow and understand your profit versus loss. If you have a good bookkeeper then they want this for you too! No more burying your head in the financial dark! 

Try implementing these strategies to help verify your bookkeepers work and get back in the know of your business' finances. 

Login to your accounting software

Whether you are using Quickbooks Online or Xero, login on a regular basis (at least once a week) to check on activities. If your bookkeeper updates the books on Thursday, then login to your account on Friday. Do a quick look around to make sure everything has been posted and that there's not a long list of transactions that need to be handled.

Meet regularly

If you and your bookkeeper do not meet regularly (at least monthly) then be sure to start. It is essential that you have a chance to ask questions and gain clarification on the finances. Likewise, it is essential for your bookkeeper to understand how your business operates, the business goals, and challenging areas you face. During your meetings review important financial reports, your income statement, and balance sheet. Be sure to ask your bookkeeper to explain these statements and reports to you. Ask questions till you completely understand where you business is financially.

Provide documentation

Your bookkeeper needs to have receipts and invoices to make sure it is categorized properly. Do not skip this. Make it a habit to get those documents to your bookkeeper immediately. Your bookkeeper will have a preferred method that will work best for you and them. One method is an app that will auto-fetch the receipts and automatically provide them to your bookkeeper. Talk to your bookkeeper about the options available.

Be open to and encourage questions

If a bookkeeper is not asking questions then they are guessing. Do not mistake their questions for incompetence, if they are asking questions they’re doing their job. Receipts from what may seem like obvious purchases may not actually be what it seems. For example a purchase made at Chevron could be gas, meal, or something else. In order for this to be classified properly your bookkeeper needs to feel comfortable asking you questions.

It’s your business’ success, so even though your bookkeeper is amazing and on top of it, sometimes things happen. Trust me, your incredible bookkeeper wants your books to be perfect too; they will appreciate your proactivity and support to maintain accurate records.

On the flip side if your bookkeeper is adverse to you being involved with the finances and following any of these strategies; then it may be time to break up and find a bookkeeper that is more open to your involvement and working together. 

What's preventing you from reaching your business goal(s)?

Every year you hear business gurus shout from the rooftops “create goals for your business!” They recommend creating clear 5-year goals working backwards all the way down to even weekly goals. This is invaluable advice for business growth (and even personal), but sometimes it can be hard to put this into practice. Strategic and specific goal setting can seem daunting, scary, or unachievable. Most business owners struggle to reach their goal(s) of success due to these top reasons:

1. Lack of funds

2. Fear

3. Not enough time

Here are some quick solutions to these struggles:

1. Lack of funds - Two quick ways to help here are: to first (here’s a big one), keep personal and business finances separate; meaning in completely different accounts. Second, create a proactive budget that you can manage easily. This includes cutting out expenses that are not essential to business operation and not producing a return.

2. Fear – Fear in itself is not a bad thing and can be used for good (like running from a lion).  Fear popping up at a time that you don’t want it to can, if you allow it, prevent you from moving forward. To battle undesired fear and fearful thoughts: write your biggest fear down on a piece of paper, think about the emotions associated with the fear, then purposefully practice changing your emotional response. This way, when fear driven thoughts or anxious sensations arise, you can evaluate, take control, and redirect it. Use purposeful forethought and planning to talk yourself down into what you really are: a confident and determined business owner.

3. Not enough time – Who doesn’t feel that there is not enough time in the day? There are a few ways to help with time management. First, try writing out your goal(s) and the baby steps needed to complete the end goal. As you complete each step, visually check it off; repeat this until you check off your end goal. Checking off your steps and goal(s) gives a change in the mental state that drives production and a sense of accomplishment. 

Another tip is to set purposeful time aside for deep work in your week so you can accomplish fuller tasks. Deep work is a fixed time to dive deeper in your content, research, or project. During this time all distractions should be put away. If needed write this time in your calendar as if it’s an appointment, set a designated amount of time and then stop.

Lastly, outsource some of your tasks to a trusted advisor. A trusted advisor can help you focus better on your business by freeing you up from doing tasks you didn’t start your business to do. Time consuming tasks such as bookkeeping are great places to start. A good bookkeeper doesn’t just do the data entry, they provide a financial advisory role to help you, the business owner, make informed decisions that drive business growth and profitability.

Put these tips into practice and see the benefits to your daily productivity, confidence, and business growth. Let me know if you have any questions, I’m always here to help. 

megan@bastionbookkeeping.com

Starting The Year Off Right

It’s that time of year again when the lights come down, current holiday inventory is put on clearance shelves, and overstocked products are on sale to make room for the new. Business goals are considered, but soon set aside as you try to keep up with everyday demands. The stress of the holiday season subsides, but new pressures appear along with that well known anticipation of how you’re to handle the next year. Sound familiar? This sensation is far too common. The good news is there are a few ways that you can take charge and help to direct your anxiety into productivity. Here are some things you can do to help get a jump-start on the new-year.

1. Make sure you are operating your bookkeeping in cloud based accounting software such as Xero or QuickBooks Online. This is part of the best bookkeeping practices for any business owner. Instant access to your financial details, with any device from wherever you are, makes operating your business easier. Not only is it secure, it’s also reliable and affordable.

2. If you have inventory in stock, you’ll want to find creative ways to maximize your sales - such as online auctions, in house party sales, or you could assign some product to influential bloggers for reviews or giveaways. These are great options for shedding excess inventory while boosting your brand with new customers.

3. Get a jump-start on the year by creating achievable financial goals that you can check off step by step. It is essential to have goals, but even more important to have manageable and achievable goals that can be checked off swiftly. Finding satisfaction and excitement in knowing that you completed a goal only brings momentum to tackling your next goal. This is key to driving your business toward success.

To help get your new year going in the right direction, here is a simple yet effective financial goal worksheet. Simply fill it in and keep it somewhere accessible to refer back to often. When setting your goals think in terms of profitability, growth, and efficiency. Consider benchmarks that increase profit through sales or accounts or work toward debt elimination.  Other considerations are goals that give you the small steps needed toward expansion or focus on work flow production.

Happy goal setting this year!