3 Things Every Handmade/Creative Biz Owner Must Do – Bookkeeping basics. 1) Open a separate biz checking account. 2) Do your bookkeeping. 3) Create a budget.
These are 3 things every handmade or creative business owner must do.
As if you don’t already have enough stuff on your plate to do being a small handmade or creative biz owner – here goes that bookkeeper in me telling you 3 things you MUST do…..
Bookkeeping….it’s a ton of fun isn’t it?
From your perspective, probably not so much.
But from my perspective of loving numbers, it pretty much IS fun…….
So, here I go with my list of the top 3 things you MUST do when it comes to bookkeeping and small business finances.
Bookkeeping Basics for handmade/creative biz owners: #1 Open a separate bank account
Do yourself a HUGE (and I mean HUGE) favor and open a separate bank account! If you haven’t done that yet —- do it NOW!
- you started a business…….act like a business!
- it’s easier (and clearer) to keep business and personal expenses completely separate
- DO NOT pay personal expenses from your business account
- Open your business account at the same bank that you have your personal account with.
- Credit Unions have great deals on business (and personal) accounts
- When you need to take personal money to invest in your business – write a check or do a transfer from your personal account to your biz account
- When you record the transfer of personal funds into your biz account, book it as as an “Owner Investment or Contribution” – it’s NOT income
Bookkeeping Basics for handmade/creative biz owners: #2 Do your bookkeeping, keep track
And seriously, you need to set up good practices for getting your bookkeeping under control AND stick with them!
You want to review every transaction and categorize them every week.
Yup, that’s right – I said EVERY WEEK.
This way you will remember what the transaction is for AND you’ll have time to dispute a charge with your bank or credit card company if you need to.
- Schedule time on your calendar to just get this done!
- 30 to 60 minutes should be enough to do your books on a weekly basis
- Categorizing your transactions on a weekly basis will save you TIME in the long run
- Once you get into the habit, you might find that bookkeeping isn’t so bad after all
Bookkeeping Basics for handmade/creative biz owners: #3 Create a budget
Set boundaries for yourself (and your biz) by creating a budget.
Your biz needs a budget just as much as you need a personal household budget.
If you don’t know what your business’s expenses are, how do you know what the minimum amount of income you need to break even is?
Without knowing what your business’s income and expenses needs are, how do you determine your fair hourly wage?
See what I mean? Budgets are important.
- Create a monthly (and yearly) budget
- Each month compare your actual income and expenses to your budget. How did you do?
- Once a month, block a little extra time into your standard bookkeeping time to do a comparison.
- An extra 15 minutes a month of bookkeeping time should do the trick.
Are these 3 things every handmade/creative biz owner MUST do – Bookkeeping basics best practices?
These 3 “must-do’s” for your biz will help you keep track of where you’re at and they will help you to GROW your biz.
When you consistently keep track of your income and expenses in a separate business account your budget will become a better tool for monitoring the success of your biz.
You’ll be able to zoom in on the strengths and weaknesses of your biz.
If you haven’t done these 3 things already, it’s time to get off the procrastination pot.
Until next time, Happy Creativity!