“I know I should keep my business finances separate from my personal finances, but I just can’t seem to stay organized. It’s overwhelming.”
Have you said those words or heard someone attest to feeling this way about small business finances? If you have, you’re not alone.
Oftentimes when you are launching your business you are more worried about bringing your dream to reality and making sales than dealing with finances. The details associated with your accounting tasks just aren’t fun.
Seriously, who wants to deal with reconciling receipts, balancing budgets and paying invoices when you’re focused on making your dreams come to life?
I get it, not everyone loves systems and numbers as much as I do.
But you should.
Creating systems and processes to work within your business right away can help you grow faster, stronger and more efficiently for the entire lifecycle of your business.
Solopreneur Accounting Tips
For over twenty years I have created successful accounting systems that allowed me to assess where the greatest opportunities for growth and risks. And the best part is this: when your accounting systems work for you, it frees up more time to do the things you love (e.g, creating products and working with your customers).
I believe that creating accounting systems from the beginning is key to a more successful business. Here are 5 simple systems that will make a huge impact on your business.
Take advantage of Evernote.
The beauty of business today, especially if you are running an online business, is that you are doing business with mostly online entities. E-mail services like Aweber, web hosting companies, social media management software, etc. The best part about SaaS companies is that they will generally invoice and send you a receipt via e-mail.
If you use Evernote, managing receipts is a piece of cake. You don’t need a time consuming process that includes printing the receipt and shoving it in a folder. Simply give all your receipts a single tag in Evernote and e-mail it to your account. Receipts filing done. Check it off your to-do list!
Don’t budget one month at a time.
All successful entrepreneurs need a plan. The best planning practice, from a financial standpoint, is to have a budget. However, when most people budget, they are overly nearsighted about it. They say, “What do I have coming in this month, and how will I spend it?” Like I said, good practice but not great.
A great practice is having a 6-9 month budget plan. Outstanding is going out even further. Let’s face it, each and every month is not the same for your business. If you just look at the very near term, you will lose sight of the bigger picture. Your business is evolving over time and you need a financial plan that helps feed that evolution.
Track your time.
One of the biggest misconceptions we make about business, especially if you are a solopreneur, is that our time is free. We are somehow “saving money” by doing things ourselves. Really, though, that couldn’t be further from the truth. You are a unique person with unique talents. Most importantly, you only have so many hours in a day.
So, set up a timekeeping system. There’s a wealth of time management apps that you can use to track how you spend your time. Once you know how many hours you are working on various tasks, you can make more informed decisions on when to hire outside help.
Create a checklist.
In the world of lean manufacturing, this is called “standard work”. It’s the stuff you will do over and over again without fail. Most importantly, it’s the stuff that has to be done to keep things rolling.
Organizing receipts, billing customers, paying vendors, balancing the checkbook. Batch these tasks, set up a recurring interval to handle them and make a list. This is the “standard work” of your business. You don’t want to think about doing it, but it’s like getting your oil changed. If you put it off too long, you’re going to have a mess on your hands.
Use a cloud-based accounting system.
Keeping track of your finances is a big enough pain for most solopreneurs. You make it worse by housing that information inside an accounting program or a spreadsheet (Ugh!) on your computer.
If your computer crashes and you don’t have a backup, you are back at square one. Leave the backups to the experts. Use a cloud based solution (Xero is my favorite), and take that burden off your shoulders. Even better, most systems will let you set up direct feeds into your financial accounts, so you don’t even have to enter receipts or disbursements anymore.
Creating systems that work for you and your business can have a major impact on your success- both in terms of time and money. Getting, and staying, organized when it comes to the accounting for your business can, and will, make that dream of yours come alive better than you ever could have dreamed.
This article has been edited and condensed.
Joe Filipowicz founded Solopreneur Accountant to put his 20 years of accounting experience to work for solopreneurs and small business owners. A passionate entrepreneur himself, he believes in creating the business and life of your dreams, while using accounting as a tool to get there. He lives in Tampa, FL with his wife and son, where the craft brews, beaches and trips to Disney World all come together. Connect with @SolopreneurAcc on Twitter.
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