Bookkeeping Archives - Page 8 of 8 - Number Nerd Bookkeeping Solutions

October 27, 2016

What to Do When Your Books Are a Mess

Overwhelm. Stress. Anxiety. Urgency. Worry.

Is this how you feel about the state your finances are in?

All too often, people avoid looking at their bank statement and just pray their card is approved when they go through the check-out lane. And it’s not for a lack of income.

If your books are a mess, you’re putting unnecessary stress on yourself and your business. Ignoring them won’t magically fix them. But, yes, it will take a little bit of work on your part.

So what does it mean, if your books are a mess? (I know, you’re trying to figure out if you’re in this boat. Here’s a tip: if thinking about your finances makes you sweat, your books are probably a mess.)

You don’t know how much you’re spending each month.
You have a wallet (or file folder) full of receipts.
You’re not sure if your business is profitable.
You’re afraid to log into your bank’s online system.
You have leftover funds in your account every month.

If you’re suffering from any of the above, read on!

Journal it Out

Before you make any kind of move, you need to get your feelings down on paper. Finances can be stressful, but they don’t have to be. So journal about how you feel about your books—right now. Where do you think you are? Where do you want to be?

Take Stock

You can do it. Gather all those old receipts, log into your banking system. Figure out where your books really do stand.

Find a Program

Nope, not a 12-step program (though you may need that for your spending habits). I’m talking about a bookkeeping program. Find a cloud-based program that is intuitive and easy to use. If you’re lost on what might work best for your business, check out this list of free programs. Or give me a call and I can walk you through a few of my favorites.

Set it Up

Seems like a no-brainer, but you’d be surprised how many clients come to me with a bookkeeping program they’ve been paying for (for months), only to find they haven’t even started using it. So connect it to your bank feed, input your categories and set up a budget.

Reconcile

Probably the most important step in getting your books in order (and keeping them there!) is reconciling your bank statements. Every month. There’s really no reason to use a bookkeeping system if you’re not going to keep up with it. Schedule an appointment with yourself once a month to reconcile your bank statements and set your budget for the coming month. You should also check in weekly to code your transactions (making your monthly reconciliation that much faster).

Overwhelmed yet? Yes, keeping your books in line can be time-consuming. But it’s a necessary part of business ownership. If not done correctly, your business (and your bottom line) will suffer. If you’re finding that you’re not up to the task, it might be time to hire a bookkeeper.

October 6, 2016

Get it Together: Categorizing and Recording Transactions

I like to think that bookkeeping is sexy. I mean, who doesn’t love a list of their month’s transactions recorded in one neat report. <Cue the bow-chicka-bow-wow music!>

Not there with me? Your accountant is sure to think you’re dreamy if you get your business transactions in order before tax time. It will save you time and money and help you manage your business finances better—so your bottom line is sexier too.

Most online bookkeeping systems allow you to connect your bank feed directly to the program. This saves you the time of manually entering each time you spent (or made) money over the last month. But you also need to know where, in your business, you’re spending. That’s where categories come in.

Transaction categories put each type of expense or income into a neat little bucket. They keep your books clean, so come tax time there’s no guessing at what you bought for $127 at Amazon and how it fits into your business.

Categorizing Income

No matter what type of business you have, your income likely comes from different sources. If you’re a service-based business, you may offer more than one service. When you track how much each service brings in, you can determine best pricing practices and whether a service is a valuable piece of your business. (Is it really making you money, or are you spending more time on this service than it’s worth?) For product-based businesses, tracking revenue for specific products helps you determine whether you’re making money on the product once you subtract production costs.

Make a list of all the ways your business receives revenue. If you get stuck, take a look at your last bank statement. List all the different types of services and products, as well as any commissions, affiliate income, interest, rent, etc.

Categorizing Expenses

Even if you’re a small business in a home office, there is still an expense to doing business. Your laptop wasn’t free and you probably use your phone and internet to conduct business. Knowing your expenses can help you plan for the future and ensure that you’re staying in the green. But most of all, when you categorize your expenses you can see where you’re overspending and where you can cut back.

Make a list of every regular expenditure in your business. How much are you spending on gas, shipping, supplies, subscriptions, client gifts, software? Take a look at your business bank statement to help you through this process. (And if you’re finding that you’re seeping cash a bit, it may be due to those subscriptions. Read my recent blog about this and clean it up!)

Automating It

A digital age bonus is that you can set up your bookkeeping system to automatically categorize transactions. This lets you quickly see the cost of providing a product or service—or of simply keeping the doors open. It also makes tax time much less taxing because your accountant can simply pull your reports, making it much easier to report on office supplies, education and training, business travel and gifts.

If you don’t already have categories set aside for your income and expenses, it’s time to get it together. Make those numbers sexier for your accountant.

September 9, 2016

What to Expect When Working With a Bookkeeper

Money is an emotional, stressful topic for many—especially when trying to grow a profitable business. And because most states don’t require high school graduates to get a financial education (even while requiring sex ed), entrepreneurs are stuck. They struggle with organizing their finances and figuring out how to report their income to the IRS because they never learned how to do it.

As a business grows, business owners tend to outsource essential tasks to employees or contractors. And because keeping the books is so frustrating, hiring a bookkeeper is often top on the list.

But it’s scary to turn the books (and passwords associated with bank accounts—yikes!) over to someone else. How hands-off can I be? How far will the bookkeeper dive into my finances? How can a bookkeeper help to grow my business? Essentially: What can I expect when working with a bookkeeper?

You’ll be involved in the process.

No (ethical) bookkeeper will take hold of your financial situation and run with it. As the business owner, you’re a vital key to your business’s financial puzzle. Any bookkeeper worth her rate will involve you in an onboarding process that includes finding out what systems you’ve used in the past, what worked and what didn’t. Together you’ll develop new systems that are simple for you but allow your bookkeeper access to the information she needs. And you’ll continue to communicate as long as you’re working with her too.

You’ll get organized. (Really.)

Bookkeepers are highly organized and systems-oriented. And I guarantee that some of that organization will rub off on you. Because you’ll need to provide information and receipts to your bookkeeper on a regular basis, she will provide you some of the tools you need to do so efficiently. And when you don’t use those tools, bookkeeping services can cost a bit more. So you’ll want to stay organized!

Your business will grow.

Outsourcing is the key to business growth. Whether it’s bookkeeping, content creation, sales or administrative tasks, as soon as you outsource a piece of your business you have more time to spend doing the things you love in your business. And when you can work on your business (instead of in it), it grows!

Your taxes will be a cinch!

Not all bookkeepers do taxes (just like not all doctors treat children). But they do know how taxes work and how to make them as simple as possible. Working with a bookkeeper keeps all your business finances organized for the fiscal year, allowing you to turn over your profit and loss statement and balance sheet, as well as other information for your personal taxes—without having to do all the clean-up work that you’ve had to do every year since…forever. Why? It’s already done, thanks to your bookkeeper!

You’ll save money.

It’s true, outsourcing is not free. But when you have someone with a finance background working on your books every month, they can easily spot areas where you’re overspending. For example, a bookkeeper will help re-categorize business expenses so you’re set up to write off as much as possible. And she’ll reconcile your accounts for you, watching out for duplicate transactions and services you no longer use. In the long run, all this cross-checking will save you money.

If you’ve been holding off on outsourcing your bookkeeping, now’s the perfect time of year to get going. You’ll get your books cleaned up in time for year-end statements and be able to spend more time growing your business—putting you in a great spot for 2017. Spend more time doing what you love in your business and leave the numbers to a pro!

February 9, 2016

When to Hire a Bookkeeper: A Guide to Small Biz Bookkeeping

Bookkeeping can often be a challenge for many entrepreneurs. It’s often one of those tasks you think is easy to take care of on your own, but you know as well as I your time is precious and can be better spent elsewhere. It’s virtually impossible to attend to every aspect of your business and sometimes even more difficult to let things go.

If you’re already DIY’ing your bookkeeping, you’re probably using a software such as QuickBooks or Xero already, or you may even be just utilizing a simple system of Excel spreadsheets. But did you know there are tons of other software’s available to you at lower costs that could be saving you money? Or you may even need something a bit more robust that your current system just isn’t doing. While saving money is a big factor, at times hiring a bookkeeper can actually save you more money in the long run.

This is where outsourcing a bookkeeper comes in handy. If you happen to be a freelancer or small to mid-size business and don’t have the time to attend to your bookkeeping, or you’re struggling to put a system in place then you’re in the right place. There’ll be a time when you come to realize, bookkeeping just isn’t where you want to spend your extra time. There are a number of affordable options when outsourcing a bookkeeper and you can read more about the different types of services available to you here.

If you’re still on the fence, here are some tips on deciding when to hiring a bookkeeper is the next step to growing and managing your business. But before we get to the nitty-gritty let’s clear up a few myths:

Bookkeepers – what do they do?

It’s a common mis-perception to mix a bookkeeper with so many other jobs like a personal assistant or an accountant. A bookkeeper is hired to record the financial transactions (that includes organizing, collating, recording and maintaining etc.) of any business to keep your taxes in check, your employees and bills paid, and invoicing up to date. An efficient bookkeeper will keep track of sales, receipts, purchases and payments as well.

Are they different from Accountants?

Yes, and they are often confused with each other. They have similar tasks, but the scope and scale differentiate them. Bookkeepers keep the accounts in accurate form with day-to-day recordings. They assist you with timely advice on late invoice payments, cash flow problems etc. We also prepare the paperwork your accountant will need when tax season comes around. An accountant will review your account periodically (usually per quarter) and file financial reports and tax returns. It’s important to be conceptually clear that a bookkeeper and an accountant are not interchangeable.

When to hire a bookkeeper?

If you are a freelancer or a startup then you need to focus on some very pressing issues like marketing, client handling, recruiting and production, etc. With so much happening around you, it would be hard for you to focus on your financial transactions and visibility. Ideally, a bookkeeper is an indispensable member of your team right from the get-go. As soon as money starts to flow in and out – your recordkeeping journey begins! Such as paying bills or receiving customer payments, calculating estimated tax payments or payroll. You’ll soon find it difficult to keep up with crunching the numbers and your workload.

There’s a ton of information to record. And believe me, it’s a serious hassle if you have little idea or knowledge of the tedious bits and pieces you need to keep track of. Without a professional bookkeeper, it’s nearly impossible for you to keep a proper record of every transaction going in and out of your business. Also, it’s a good idea to have another person review your bottom-line and ensure you are making the most profit you can. This can result in serious financial mistakes and monetary losses that you definitely want to avoid. Ideally, you’ll want to focus on what you love doing rather than what you don’t, the numbers.

Feel free to check out how we work here and the different options available to you here. I’m sure you’ll find a bookkeeping solution to fit your needs and if not we can come up with a customized solution too. Let me be the “nerd” and crunch the numbers so that you can continue doing what you love!