I used to dread the ‘paperwork’ part of doing taxes because I used a system of spreadsheets and an outdated accounting program, but things have gotten way smoother since I implemented a strong foundation and online programs.
As I was reviewing the video, I noticed that I use the phrases “don’t do what I did” and “I don’t want this to happen to you” a LOT. But this is a normal part of being a business owner – making a crap ton of mistakes. And I admittedly have made a lot of mistakes, especially when it came to setting up systems for handling small business finances.
If handling your small business finances is an area that makes you tear your hair out, you need super simple systems, I got you covered!
As a small business owner, there is always something that needs to be done. Manage small business finances? That’s an easy one to put off for another day. And that’s how chaos happens. These six easy tips will help you manage your small business finances and stay organized.
We are still on the theme of Financial Systems for Your Small Business.
Last week we went over accounting programs and I can’t tell you what a big difference it has made in my business. Because for the first few years of my business, I had the most convoluted, ineffective system you’re ever going to see and I’m going to show it to you. And please don’t laugh.
What happened was that I never really knew what to track so I tracked everything. I had PayPal over here, I was using different credit cards. I told you a couple of weeks ago that I was commingling my money and my accounts were all screwy. I want to take you behind the scenes of what it used to look like and what it looks like today. Here we go…
What you are looking at is a revenue sheet from 2014 so my Excel spreadsheet, I was tracking my products and programs sold, which I listed every single thing that I was selling – programs, ebooks, everything that was in my shop at the time. Then I had another tab for affiliate income, then client revenue, and then I would total it all up and then I would plug it into my expenses over here so that I would always know what my revenue was for the year.
For expenses, I was tracking everything. I had one sheet for domain registration, business learning, PLR, software, creatives… as you can see, it’s so convoluted.
Now I’ll show you my bookkeeping procedure for every single month.
I would gather documents needed so that was my PayPal spreadsheet, Discover card statement, Wells Fargo statement, checking account statements. I would then total up all the expenses and then run the income reports in Infusionsoft and THEN I would plug it into QuickBooks Simple Start 2008.
So ineffective and such a nightmare, it took me hours every single month to do this.
I decided on a whole new online solution. The first thing I did was create a chart of accounts. A chart of accounts is a listing of all of the accounts used in the general ledger by the accounting software to aggregate the information into the financial statement. When you run the reports, your expenses are put into the correct categories, your income is put into the correct categories that you set up. My problem was that I just didn’t know what to set up. I did go to an accountant and she helped me set this up.
Once this is set up, you plug it into your accounting program.
Aside from tracking expenses to create financial awareness, I also need the information to make business decisions. Knowing how much my Passive Income Planner made last month really didn’t matter. so I went about coming up with groupings that let me make better decisions and made sense.
Having this information makes tax time easier, makes me stick to a budget, and be more money aware and it also lets me make business decisions. For example, the three sections I created for revenue are income from client consulting, sales from my online store, and commission from affiliates. In looking at my income, I learned that affiliate commissions make up 1/3 of my income. So what do you think I’m going to pay more attention to in the coming year.
So that’s my accounting system, it’s pretty simple now that I have an online program. If you are looking for a little help in this area, I want to let you know that this is one of my bonuses in my Business Freedom Guide program.
If you don’t know where your money goes or how you spend it, you won’t know what habits you can change in order to make your money work for you.
Catch up on other Financial and Payment Systems episodes + resources mentioned in the video:
Did you enjoy this episode and want to put it into action? Grab this Growth and Profit Plan!
Growth & Profit Plan: Financial & Payment Systems
If you are in year 1 or year 10, it’s never too late to get your financial act together. This Financial & Payment Systems Growth & Profit Plan is about bookkeeping – recording what’s coming in and what is going out – and other systems that you can easily set up and use in your business.
I cover why tracking your numbers is so important, simple systems for setting up your business for financial success, and provide lots of helpful worksheets, letters, and resources to help save you time and be more productive.
WHAT YOU GET
The Financial & Payment Systems Growth & Profit Plan includes:
- Training video
- Business accounting worksheets
- Sample chart of accounts for coaches, consultants, and service providers
- Payment letter templates to handle difficult client situations with ease
PLEASE NOTE: Once you purchase, you will receive an email with your login/password to gain lifetime online access to your Financial & Payment Systems training.