Accounting Tips + Tools for Small Businesses
As a solopreneur, handling my own accounting used to give me nightmares…
Because until recently, I’ve never had the best relationship with money. I mean… I LIKE money, and always want more OF it, but like many other creatives, I just didn’t seem to be born with the “numbers” gene. Talks of accounting and balancing the books would make me break out in a sweat, and doing taxes each year often led to a mini mental breakdown.
But ignoring money matters doesn’t make them go away, and so I promised myself (and my business) that I’d get better.
And slowly but surely, I have.
So here are my top tips + tools for getting better at handling the accounting stuff for your small business, even if you’re not a “numbers” kinda person…
(or scroll to the bottom to get right to the discounts!)
TIP ONE for better business accounting: know EXACTLY where your money goes each month.
I used to live month to month, and would FREAK OUT when it came time to pay bills. This is especially scary if you’re like many small businesses where your income isn’t steady, and you suffer from “slow seasons.” (Ummmm… like the life of a PHOTOGRAPHER, anyone???)
But I discovered one of my favorite online tools called “You Need a Budget” (YNAB, for short), and have been doing a mega-happy-dance ever since!
Here’s why:
I connected all my accounts where transactions occur… checking + savings accounts, PayPal, and even my credit cards.
In the “budget” page, I created categories for how I ACTUALLY spend my money. I could get as DETAILED with this as I wanted, and add/hide categories, too! I put in all my PERSONAL stuff like rent, groceries, specific utilities, recurring stuff like Spotify + Hulu, etc. And I created other categories for all my BUSINESS stuff… like Client Orders, Client Costs, Taxes, and subscriptions like HoneyBook , etc.
Once a week, I’d sit down and sync my YNAB account, to pull in all the new transactions. Then I’d go through and add a specific category to each one!
Doing this consistently for a month gave me an accurate snapshot of where my money was ACTUALLY going!
TIP TWO for better business accounting: create a monthly BUDGET (and stick to it)!
While knowing how you’re ACTUALLY spending your money is the first step to better business accounting, the NEXT step is to create a custom BUDGET for yourself, and get better at actually sticking to it.
Because by seeing WHERE your money is going, you can see where you might be a bit frivolous + overspending… like, I realized I spent waaaaaay too much on eating out each month. And on the business side, I learned I wasn’t setting aside enough money for my taxes, which got REALLY scary when it was time to pay.
So I created a monthly budget, and have now gotten so much BETTER at it that I’m actually able to save for TWO MONTHS ahead of time… squirreling away some funds just in case of a slow season ahead!
Here’s how:
I use YNAB for this part, too… Using my custom categories, I created a monthly budget so I know approximately how much money I need to set aside for each category each month. (Ex: I set aside the money I KNOW I’ll need to pay for recurring things such as rent, utilities, etc., and then I set aside an approximate amount for things like groceries, eating out, fun money, etc. Same thing with the BUSINESS stuff… not only will I set aside money for recurring payments, but I can also set aside money for things like airfare (if I’ve got a business trip coming up), Facebook ads, etc.
Each week I sync YNAB with my accounts and categorize each transaction. Then I can see where I might have overspent, and move money around as necessary to cover overspending or budget for upcoming things. And any INCOMING money (which I categorize as “Client Orders”) is moved into the “To Be Budgeted” category.
The goal is to give EVERY DOLLAR A PURPOSE. So I don’t leave ANYTHING hanging out in the “To Be Budgeted” category. instead, that money is moved to wherever its needed… I start with setting aside 30% of my profits to my “Taxes” category, any necessary funds to “Client Orders” where I KNOW I’ll need to purchase items for them such as prints, albums, etc., and then the rest of the money is added to the other categories as needed.
The GOAL is that, by giving every dollar a purpose, I am much more careful about what I spend, where, and when. And by getting into this healthy monthly routine, I’ve been able to pay my bills without wondering WHERE the money is coming from that month… and start saving for future months, too!
TIP THREE for better business accounting: HAND IT OFF to a professional!
I realize that, as a small business owner or solopreneur, you wear MANY hats. And you have to try to keep your business costs to a minimum.
However… in some areas, it’s WORTH THE MONEY to pay someone ELSE to handle things for you.
I meeeean, if you’re running a small business… even as a solopreneur… you’re not actually EXPECTED to do everything yourself. And if you’re spending hours + hours each month handling your accounting/bookkeeping stuff, what’s it actually COSTING you? Those are hours that you could be spend working on client stuff instead (where you’re actually getting PAID).
Instead, put your time where your talents lie, and outsource the rest. (Pssst… business accounting costs can be a tax write-off, too… so it’s TOTALLY a win-win situation!
My recommended tool to hand off your small business accounting: Bench.co.
Because Bench is a company of ACTUAL bookkeepers, not just an online system. And you’re assigned someone to actually help you along the way.
Your Bench bookkeeping team imports bank statements, categorizes transactions, and prepares financial statements every month. And if you’ve got questions, they respond within one business day.
Then they give you monthly financial statements and expense overviews to keep you in control of your money.
And come tax time, you’ll receive a Year End Financial Package that has all the info you need to file your taxes. They’ll work directly with your CPA, or set you up with one they trust, to make sure your taxes are filed painlessly and on time.
(How’s THAT for breathing a deep sigh of relief????)