With fabulous bookkeeping software tools like QuickBooks, sometimes we think we need to pay a lot to get a lot. But when it comes to keeping our financials straight, it can be as simple as having a pen, a paper and a calculator. Yes, it would awesome if we all had the money to hire a professional CPA or a friend who was really good at bookkeeping to help us out with the budget, cash flow, accounts receivable and payable. As small business owners, all we really need is strong basic math skills.
If you’re just starting off with your business, hold off on the QuickBooks Pro 2011 for now. Your business is probably more focused on expenses and receivables. You need to know how much money is going out and how much money you’re bringing in. And there’s a simple way to tackle this task without outsourcing this responsibility to a third party or buy an expensive program. All you need is a box of envelopes, a legal pad, pen and a calculator.
You should know by now to save EVERY receipt. Whether it’s a gas receipt, dining out, supplies for the business, it doesn’t matter. You’d be surprise what you could write off. Divide your receipts into the quarters of the year. All purchases made between January 1st and March 31st go in the envelope you’ll mark as “First Quarter’s expenses”. You wanna do this for all the quarters. No, it’s not a fancy system but’ll it keep you organize for now.
Take a sheet from that legal pad and write the categories of those expenses. “Food”, “Travel” (which can include gas and lodging), “Supplies”, “Vendors”, whatever you used that quarter. Make sure at the end of the quarter, you sit down, go through those receipts, place them in their respective category and do the totals. You want to do a grand total for the quarter and a average monthly total. This will tell you how much you’re spending on what. If you think too much money is going out, you can get a numerical visual on what you can count back on. It’ll also help you set up budgets and limits; how much you’re going to spend on a particular category per month per quarter.
The same method can be applied to the monies coming in. Rather than looking what to cut, you can focus on what do to bring more money during a low income month or quarter. Than might require more advertising or networking on your part, but you can start to see where you need to pick up the fiscal slack.
Bookkeeping gets a little more tricky when you have employees on payroll and property taxes to worry about. But when it’s just you and your business, keep it simple. You don’t need to call in the heavy duty forces just yet.
[*photo source: freedigitalphotos.com, by nuchylee]