The Final Piece of the puzzle: Licensing & Tracking Your Business Finances

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The entrepreneurial journey can be exciting and rewarding. In the previous post I shared a few tips to help you get started on your journey. This week we will finish the tips list with discussing how to make sure you have the correct licenses for your business and my recommendation on software to use for setting up the tracking system for your business finances.

Licensing For Your Business

It is so important to get started on the right foot when you start your business and making sure that you are operating legally is paramount. According to Legal Zoom, “Virtually all businesses will need a license of some sort, and many will need to apply for a number of different licenses and permits. The types of licenses and permits your business requires will depend on where you live and the type of industry you’re in.” Check out their checklist to make sure you have the right licensing/permits for your business.

System For Tracking Your Business Finances

You are going to put in many hours and days getting your business off the ground and selling to your customers. You will have your own personal money that you will use to fund your business and hopefully a ton of customer sales. Once the money starts flowing in then you will most likely focus on how to keep the process going and taking a moment to see how financially well your business is doing might take a backseat. That is unless you get started on the right foot. My recommendation is to set up your business bookkeeping system using Quickbooks Online. This will help you to begin tracking your business finances correctly from the start. Once you have opened your business checking account then you are going to want to subscribe to Quickbooks Online and connect your bank to the software so that you can start tracking your business activity within the software. 

This is important so that when tax time rolls around you will have all your ducks in a row to get the most tax deductions possible. My suggestion is to start with their basic subscription called Simple Start and as your business grows then you can always upgrade to a higher plan later. Incidentally, I do not recommend the Self-Employed Subscription as it only tracks the Profit & Loss activity and you can’t upgrade to a higher subscription later. This subscription is basically geared towards working professionals who intend on doing a side-hustle and not go into business as a full-time entrepreneur.

The entrepreneurial journey is filled with ups and downs but getting started on the right foot will help you to be a successful.

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3 Tips To Stay On Top Of Your Finances!

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Greenback,Moolah & Dinero. These are all references to money. For many of us the profit and loss report is the most important financial statement that we want to see on a regular basis. Why? Because it tells the story of how much we made, how much we spent and what is left over affectionately known as the bottom-line. So how can we stay on top of our finances so that we can know how much money our business is making?

1. Use a bookkeeping system on a regular basis to keep fresh data flowing into your reports.

2. Look at your reports on a regular basis. If you have monthly bookkeeping done and don’t review your reports on a monthly basis then you won’t be able to measure how well financially your business is doing. If you don’t understand your reports a good bookkeeper can help you with that roadblock.

3. Spend some money on a good CPA who will help you to create tax planning goals for your business.

We are all in business for different reasons BUT the one neutralizer is that we want to make money. The bottom-line is the reason and by applying the tips above you will be on the road to financial success.

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More Reasons Why You Should Use Accounting Software To Track Finances

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The life of an entrepreneur is not for the faint of heart. The word busy is something that just comes with the territory. Nothing is more frustrating than working yourself to the bone but not having the information you need to make important business decisions. Here are a few more reasons why using an accounting software program like QuickBooks Online to track your hard-earned finances makes financial sense:

• It will arm you with information to determine if you can pay yourself

• It will help you to determine if you can start bringing on team members

• It will help you to pull reports to see if you are on the right track for your annual revenue goals

• It will help you to stay compliant with the taxman

If you have a special spreadsheet that you like to use to track your finances keep on using it BUT also use a professional accounting software system to track your finances so that you can pull reports to help you to make important business decisions. One day you might just decide it is time to ditch the spreadsheet.

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Follow The Rules Of The Road!!

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The key to building a solid foundation for your business finances is to follow the rules of the road. In the blog post last week we took a look at the chart of accounts in relation to building a solid foundation for your business finances. This week we will take a look at workflows in QBO. First, I need to ask the question:

Are you a rule breaker or rule follower?

 I know that I am equal parts rulebreaker & part rule follower:) 

When it comes to using QuickBooks Online I am definitely a rule follower. In order to ensure that you are getting the most out of the software, it is important to follow their predetermined workflows. One area that I see a lot of “rule-breaking” around is not using the workflow for receiving payments. The scenario can go something like this: your customers pay you and then you receive the payment and deposit the funds into your checking account within QuickBooks Online. 

This Is Great:)

You provided the service and your customer paid you. It sounds like everything is working okay UNTIL you try to reconcile your account and the money you deposited to your bank in real life isn’t matching what is showing in QuickBooks Online.

What Is Going On Here?

The problem is that the predetermined workflow was skipped and as a result confusion and frustration have taken hold. The proper workflow is to receive payments against the invoice and select the “deposit to” account undeposited funds. Next, the deposit that you made at your bank will show up in the bank feed and there will be a match that shows that you are good to go. In contrast, when the workflow is skipped then the funds you deposited into the checking account will not match what is shown in the bank feed because they are not grouped together which is how you made the deposit at your bank in real life.

I am a free-spirit and rule-breaker on something like eating more sweets than I need to. :)

But when it comes to QuickBooks Online following the rules is best because it can help you to build a solid foundation for your business finances and avoid frustration. 

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Are Your Business Finances Built on a Solid Foundation?

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As business owners we all want to make money and have the information we need to see if we are not doing so well. The ability to pull reports to make financial decisions about your business is one of the most important resources you have at your disposal. The information is only as good as the data that is in your accounting software. I am sure you are familiar with the terms “garbage in & garbage out.” This can happen if you don’t have the correct foundation set up in your QuickBooks Online software.

 I like to look at it this way

When you want to make a delicious sandwich what is the most important thing you must have first? 

Good Bread!!

If you have wimpy bread or cheap bread that doesn’t match the type of sandwich you are trying to make then it will be an epic fail and you will probably go to your favorite sandwich shop to buy the sandwich you want. But if you start with a delicious baguette or a good focaccia roll then you are on your way to building something quite yummy. Much in the same way this is how it works with building a solid foundation for your books in QuickBooks Online. The first step to building a solid foundation is to set up the chart of accounts correctly according to:

• Your entity type

• Your particular industry

• Your tax return (which goes back to your entity type:)

If you set up the chart of accounts according to the items above and use best practices then you are on your way to creating a solid accounting foundation for your business that will allow you to run reports and make sound financial decisions. It all starts with the “bread” for your books which is the chart of accounts. 

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Welcome To The Month Of April!

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I don’t know about you but the month of April just brings a smile to my face.

:)

There is something about watching the flowers come into full bloom and leaves growing back on the trees that just warms my heart. The weather here in Las Vegas is a comfortable 70'ish degrees right now and the sun is shining. In the next month or two, we will be on fire with the heat BUT that is later..lol

April goes hand and hand with spring cleaning and I have been doing a little bit myself these days. I have also been doing some spring cleaning in my business by taking a look at the overall health of my business and areas that I can make improvements. One area that I love taking a look at is my financial reports. This month I am going to focus on looking at the 3 major financial statements you should be looking at monthly and why they should matter to you. The 3 major financial statements are the Balance Sheet, The Income Statement (P&L), and The Statement of Cashflows. I hope you will join me on this financial journey and learn something that you can add to your business toolkit.

Keep IT Sunny!