What You Should Know for Home Business Record Keeping

What You Should Know for Home Business Record Keeping

home business record keepingHome business record keeping should be your priority when you start a new business, but you most likely have come across several types of software that you can use to help you keep these all important records.

If you’re like me, you probably considered keeping your records manually because you weren’t sure that you could afford to buy software. It’s a lot of work right?

The choices can be overwhelming, but if you don’t have a big budget for software or the time to do it all yourself, just go back to the basics before you do anything else.

There are some very basic points about keeping your home business records that you should know before you get started.

The Basics of Home Business Record Keeping

Record keeping is vital for your home business, but oftentimes it’s the last thing business owners think about. Getting organized and staying organized are vital to your success, and it’s important that you focus on the basics of home business record keeping to keep track of your income and where it’s being allocated.

Here are some important tips for you to help you stay organized.

  1. Make sure you have your business license. It’s important that you not only get your business license, but that you also have it filed in a place where you can find it at a moment’s notice. Keeping your business license within reach is important in case you are audited for taxes, or if you need to fax it to a business attorney for any reason. A license is proof that you can conduct business in the state, city, and county where you live.
  2. Keep your business and personal expenses separate. There’s nothing like getting things confused, and if you don’t separate business and personal expenses, you could end up with some real issues. Keep a filing system in place for your personal finances as well as for your business, but do review them temporarily to ensure that any receipts go where they belong.
  3. Dedicate time to organizing finances only. Every task that you do should have some time that is dedicated to it. Finances should always be top of mind, so be sure to set aside time just for organizing your finances. Make sure that time is at the same time each week, and you have zero distractions.
  4. When in doubt, call a pro. Tax time can be harrowing, and that is why I always advise business owners to set time aside each week to review business expenses, receipts, and so on. If you do this once per week, then you’ll be able to keep up with it rather than waiting until the last minute. Once tax season arrives, you’ll have everything you need at your fingertips, and you’ll have a lot less stress.

Becoming a business owner can be a lot of fun, and it can be very profitable, but it’s not always easy. Keeping track of your daily activity to make money is a lot of work, but keeping track of money is even more work.

Don’t get too carried away with spending money on marketing until you have come up with a good system for your home business record keeping.

One thought on “What You Should Know for Home Business Record Keeping

  1. There is a lot of good information in your article. Especially pointing out setting up systems before starting to market. There are many things to do before marketing that people don’t know. That’s one of the main reasons marketing turns out to be so challenging and many times just doesn’t work.

    Another reason for separating your business and personal expenses is… you need to do that because otherwise, you will not be able to tell how much you have left to pay yourself a salary. Business expenses, taxes, etc. will be overlooked and you may start to market harder because you’re short on money.

    It’s a good idea to file your business expenses ‘the old fashion’ way before jumping on a computerized system. The easiest way to do this is to set up files quarterly. To start just get 2 hanging files. Name one 1st Quarter Income and the other 1st Quarter Expenses. Bank statements, PayPal information, deposit slips go in the Income file. Easy. Receipts, invoices you pay and other business expenses go in the 1st Quarter Expense File. Just make 2 files for each of the other 3 quarters. Your accountant will love you and you will be happy with how easy it is to get your information together when tax time comes. The case can be made to take the files for each quarter to your tax person or accountant at the end of each quarter. They may give you some information that you will use going forward that will save you a lot of money. Have your accountant put your information in Quick Books Pro. There are cheaper ones out there, but QBP is the one your accountant will probably
    use.

    While my website is directed toward coaches, the systems work well for anyone who is trading time for money. If you have cost of good sold to contend with, your systems will be a little more complicated.

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