Monthly Bookkeeping
You started a business! Congrats! Now it’s time for the tough part learning how to run your business. The good news is you came to the right place! The bad news is there is a lot to learn! Most small business owners are not accountants by trade or even interested in the number side of their business. However, part of running your business and profiting means you need to get comfortable with your numbers. And you can’t get comfortable with your numbers without actually having numbers to be comfortable with! Here’s where your monthly bookkeeping tasks come in.
The goal of bookkeeping is to show the business owner how much income they are bringing in each month and how much they are spending each month on expenses. The difference between the business’ income and expenses is PROFIT. And most small business owners want their business to be profitable.
So how do I track my businesses expenses and income?
The easiest way to track business expenses and income is to hire a bookkeeper. If your business is profitable lets chat!
If your business is just starting out or you can’t afford a bookkeeper using a bookkeeping template can be helpful. You can also use an excel spreadsheet.
I have a tracker or excel but don’t know what the next steps are.
This is where the monthly bookkeeping checklist comes in!
Below is a step by step guide to completing your own bookkeeping without accounting software. I have also linked my monthly bookkeeping checklist for you to download and reference each month as you complete your bookkeeping!
Step One: Pull your bank and credit card statements. (Make sure you have a business bank account set up. If you don’t check out this post on setting up a business account). Open one business bank account and one business credit card. Don’t overcomplicate your bookkeeping with a bunch of accounts and cards.
Step Two: Categorize your bank transactions. For deposits into your account label them as income. If you have multiple sources of income like coaching, a course, mini course etc. you can break the deposits up into different categories and make sure those categories tie to the total income amount. For clients with multiple streams of income I find it helpful for them to know what streams are bringing in the most money. If this is not something you are interested in you can simply just put all deposits to income.
Next you want to categorize your expenses. Some of the expense categories I use and often tell my clients to use are office supplies, subscriptions and dues, contractors (This category is particularly helpful when you have to file 1099s at year end), rent, business development, travel expenses (this would include hotels, airfare etc), travel meals (if you travel for business purposes meals can be tax deductible so you want to make sure they are separate from other travel expenses so you can ask your CPA when you file your taxes), advertising and promotions, cell phone expense, utilities, bank fees, etc.
Step Three: Calculate the difference between your income and expenses. If the number you are seeing is positive you have a profit! Congrats that is a huge milestone in growing your business. If the number you are seeing is a negative that means you are operating at a loss. If you are operating at a loss it could mean your business is brand new and you need to make more sales. It also could mean its time to cut back on some expenses. A good place to start is by taking a look at reoccurring costs, are you actually using those subscriptions? If not cancel them! Even if your business is profitable its always good to take a look at your expenses and see if there is anything you can cut back on. By knowing your profit you can make informed decisions on what to continue doing to grow your business or see things that aren’t working out the way you hoped and cut back on them.
Reminder: make sure to save copies of all your paper receipts. I like to scan them and keep them in a google drive by year and then organized by month.
Now that you got the basics its time to but your knowledge to the test! Download the monthly bookkeeping checklist and sign up for our mailing list to get monthly bookkeeping and tax reminders!
If your really stuck reach out about our DIY service. We will help you set up bookkeeping software and walk you through the basics. This plan also provides unlimited voxer access to me for 3 months following your set up.
