I thought I better clarify something I said yesterday. I am NOT bad with money, and I do a good job of making sure my business does not lose money for my family. But I do not do a good job of keeping the accounting software I have up to date.
I could, accounting software is really easy to navigate once you have it set up. It would take less than 10 minutes to make sure a transaction was entered correctly, and then I could get any information I wanted about what books are selling at the touch of a button. But really, that doesn’t matter so much to me. I can get any of that information in a few ways, so the software really is just there to help me keep track for taxes.
But this system only works for me because I do a few other things. Really, by not keeping track, I put myself at risk of losing money or writing bad checks for my business. I would never recommend that to anyone, even though I do it myself.
Here are a few things that Will make tracking your money easier (and yes, I do actually do most of these which is why the computer entering is not such a big deal).
1) Open a separate account and do not mix money. If you use your business name you will need some form of identification for your business like a DBA or a LLC certificate. But even if you do not have a formal business name keep your business money in its own account. Then when you want to use the money for personal things, do a transfer or write yourself a check so that it is easy to track. This will make it much easier to fill out the forms you need around tax time.
2) Have one place where you keep your receipts and bills so you always know where they are. Do not mix them with your personal or household receipts, and don’t throw them away. This is the information that tells you how much money your business is making or losing.
3) Don’t ignore the finances for months. I know I do this, because it really does seem better to me to do five hours between semesters than to lose time when I could be studying. But this is really just laziness on my part because as I said, it should only take a few minutes to enter it into the computer. But I do a good job of keeping all my paperwork, so when I do the marathon financial update days they go fairly easily.
4) Don’t forget who paid you. Write on the information sheet you keep for each client what day they paid you and how much. If you give them receipts and keep one for yourself that is even better. You need this information to make sure all your clients have paid (especially if you wait a few months do enter your accounts into the software you use).
5) Don’t buy business stuff with personal money. I know it is tempting, especially when you are cash poor at the business. But force yourself to save for the items you need so your business doesn’t end up losing money. It is very easy to keep buying supplies for your business without realizing how much you have spent when you pick up a few things here and there on your personal account.
So, there are five ways to help make the finances work better, from a woman who knows the advice is good but doesn’t apply it all to her own life at present.