How to manage your money as a new entrepreneur (PART 4): Tracking income & expenses
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When it comes to managing the money in your business, you want to ensure that you are tracking your income and expenses like you once tracked down the name, age, and shoe size of the girl your ex started dating.
Why?
Because you want to have enough cash to fund your business AND pay yourself.
Know what service is making you the most money and what you should send packing.
See where you’re overspending.
Here’s how to create a solid system from the get-go to ensure you’ve got it all covered:
OPEN A SEPARATE BANK ACCOUNT
This is step #1 for any business. If you have not opened a separate bank account, please, stop, drop, and get it done.
I wrote a post about the “why” behind this step here. (Hint: It makes life easier, protects your assets, AND helps you grow your biz.)
But if you don’t need any convincing, then download my free chart with my personal top picks for your business bank account and sign up for one stat.
SMALL BUSINESS BANK ACCOUNT CHART
FIND YOUR ACCOUNTING SYSTEM
When I say “accounting system,” all I really mean is a place to track your income & expenses.
If you have relatively few transactions (think 20 or less per month), you can get away with tracking this manually using Excel or some other free tool.
However, if you have more than that and don’t necessarily love spending all your time managing your back office (I love numbers and even I’m not about that life myself), then you’ll want to upgrade to some more sophisticated software.
My personal favorite is QuickBooks Online because of all the integrations, sophistication of the software itself, and its ability to grow along with your business.
However, do your research and find which works best for you. Xero isn’t a bad option, but I will say, I’ve had horrible luck with Freshbooks.
My one recommendation for whichever platform you choose, though?
Make sure it’s on the cloud.
With how mobile we now run our businesses, you’ll want to ensure you can access it wherever you are, even if you don’t necessarily have your laptop handy.
IMPLEMENT PROFIT FIRST (OPTIONAL)
Once your bank is set up and you’ve been rockin’-and-rollin’ with your accounting software for a few months, I would highly consider implementing the Profit First method or a variation of it.
Essentially, this method pools your income into different categories upfront, allocating the money that comes in to buckets like operating expenses, taxes, and owner’s pay (woo!).
You can get the book and learn about it yourself (click here for a link to the book), but if numbers aren’t your thing, it can get a little complicated (and maybe boring – I don’t know, numbers ARE my thing, so I ate it up like crazy).
Thus, don’t hesitate in reaching out to your bookkeeper, CPA, or me to get a better explanation and implement it in your business.
I personally do a variation of this for my business, and it works WONDERS.
If you haven’t had the chance to read the previous posts in this 4-part series, take a moment and check them out.
Closing your eyes and diving into the chilly pool of entrepreneurship takes the breath out of everyone, but don’t let that fear keep you from what you really want.
You’ve got this.
P.S. Have any lingering questions?
Hit me up at brittandthebenjamins@gmail.com and let me know!
