Getting Financially Organized Means Brighter Days of Small Business Ownership Ahead

Feb 23

Hey, people. Welcome to late February, arguably the worst portion of the year in my personal opinion. Lol just kidding–well, kind of.

It can feel by now like most of that new year adrenaline has worn off, but there’s such a long runway of year ahead and perhaps nothing super exciting on the immediate horizon, holiday-wise at least. Plus, for small business owners, the upcoming tax deadline looms overhead. And it’s still mostly cold and dark outside. All that to say, you might just feel ‘bleh’ right now. That’s understandable.

But we can change that.

*Cue your eye roll.* I know–I’m an accountant. What can I possibly do to get you out of your slump??

Granted, I don’t have anything to suggest to turn your month around that’s super sexy or bucket-list inspired. But I can offer you a way to feel a little less buried under anticipation of all that’s to come this year related to the financial management of your small business, as well as offer you the pride of accomplishment, which is huge!

Right now, even in cold, dark, bleak late February, you can take practical steps toward the kind of better financial control that will brighten the rest of your days as a small business owner. And then on top of enjoying a job well done, you can reward yourself with some cheesecake or something.

See, late February just got so much better.

MAKE THIS YOUR MONTH OF IMPROVED FINANCIAL ORGANIZATION.

I’m turning it back over to my friend and client to continue anonymously sharing her experience with initiating a Quickbooks membership, thereby tying up her financial loose ends and opening the door to more enjoyable days of small business ownership ahead.

“Hello again, friends and fellow female small business owners! We previously left off with me verifying my choice of Quickbooks subscriptions and learning what the Balance Sheet and Profit and Loss Statement contain.

“Then we jumped right in.

ORGANIZING YOUR QUICKBOOKS CHART OF ACCOUNTS

“First on my list was to set up my Chart of Accounts, which is basically the framework for categorizing all forms of money coming in and going out. Within Quickbooks, the Chart of Accounts directly feeds the data reservoir from which the Balance Sheet and Profit and Loss Statement pull. So, getting it nicely situated is the first step toward accessing confirmation that you’re indeed running a healthy business.

INCOME CATEGORIZATION WITHIN QUICKBOOKS

“Money coming in gets categorized as Income, and more detail gets applied as to whether that income was generated through the sale of a product or service. And each source of income is given its own account or line within the Chart. Everything is broken apart as granularly as possible so that even with your quickest glance at your Quickbooks account, you still get an accurate picture of what’s going on.

EXPENSE CATEGORIZATION WITHIN QUICKBOOKS

“Money going out gets categorized as Expenses, with an important distinction made as to whether each expense is related more closely to running business overhead, like subscriptions, rent, WiFi, etc., or with directly producing a specific product or service, like fabric to make a pillow, in which case it would then be categorized as a ‘Cost of Goods Sold’-type expense.

EQUITY CATEGORIZATION WITHIN QUICKBOOKS

“If you’re a sole proprietor, money designated for owner’s pay as well as for the payment of income taxes gets categorized as Equity, because that money is a result of doing business rather than having been spent in order to do business. And because it’s decided upon based on your net profit. Remember that net profit = revenue (income) - expenses. So what is calculated according to your resulting net profit can’t count as an expense.

USING QUICKBOOKS TO ORGANIZE THE WAY YOU GET PAID

“With my Chart of Accounts set up, I then can create invoices that, when paid, will automatically funnel to their corresponding account, as well as expense projections, or ‘bills’, that pull from their category for reporting purposes.

“Here’s how:

“First, within the Sales tab of my Quickbooks account, under the Products and Services heading, I individually recorded each of my services according to its type as well for whom it’s done, giving them a name as well as a pricing rate.

“Example: ‘Service X/Customer X - $1,000/month”

“Additionally, under the Customers heading, I listed each of my customers, including information such as their phone numbers, email addresses, and business addresses for proper routing and documentation of my future invoices.

“With all of that information logged, I can basically construct invoices by filling in their blanks–super easy! I click to create a new one, then select the customer designation and service sold, which then categorizes that service according to the designations assigned in my Chart of Accounts. So when the invoice gets paid, that income, and all of its associated details, will be documented correctly, thereby telling an accurate story about the health of my small business on my financial reports.

“In addition to ensuring accurate organization of my financial reports, having created my invoices, Quickbooks can then track for me all that remain unpaid, helping me keep tabs on who needs a reminder.

“But that’s still not all. Quickbooks will account for even unpaid invoices when calculating my cash flow projections. That way, when considering both the present and what’s to come, I can always have a realistic picture of where my small business stands financially, even if the money in question isn’t currently sitting in my account.

USING QUICKBOOKS TO ORGANIZE THE WAY YOU PAY OTHERS

“It works basically the same way with expenses.

“With every anticipated expense given a category within my Chart of Accounts, when charges are made or bills get paid, those expenses, and all of their associated details, will be documented correctly–again, thereby telling an accurate story about the health of my small business.

SETTING UP QUICKBOOKS IS EASY

“And from a bird’s eye view, there you pretty much have it!

“In what’s taken me two quick summaries to describe, I’ve gone from sketchy-DIY-spreadsheet-that-might-get-me-audited girl to digitally-and-financially-competent, got-all-my-bases-covered female small business owner. Not a lot of work for a big feeling of relief!

ENROLL IS STEVIE’S QUICKBOOKS MASTERCLASS

“I highly recommend Stevie’s Quickbooks Masterclass to all of you who could relate to my feelings of confusion and overwhelm in the beginning. Stevie explains the nitty gritty details and nuances of individual situations far better than I ever could, and she’s helped me so much!

“Best of luck to everybody out there!”