5 Must-Do’s to Stay on Top of Your Books in 2022
Today’s topic is so exciting for me, because we are starting off a fresh year in just a couple of days, and I want to make sure that you are starting off on the right foot in your business, too.
I remind people all the time that you're in business! This isn't a hobby or just something that you're doing for fun, and I want you to treat it like a true business. And when you do that, it really changes your mindset about things. If you're just kind of haphazardly doing things with your finances and your business, then you're not really running it and having that CEO mindset that you need in order to scale.
So, I'm going to give you a few tips for what you must do to stay on top of your books in 2022. These are the things I need you to do now so that you're on the right track and you can keep up with things and start some new habits.
Must-Do #1: Stop Commingling Your Money
What I mean by that, is that your personal funds and your business funds should not be intertwined. You should have a personal bank account and you should have a business bank account. Your personal expenses should be paid out of your personal account, and your business expenses should be paid out of your business accounts.
It seems super simple, but a lot of people don't do this. I hear it all the time: “It's just easier. Oh, that's just too complicated. It's easier just to keep it all together.” Well, it's really easy to get a business bank account and treat your business like a business! And the reason you should do that, is that it simplifies things for you especially for tax time.
And, if you are an LLC, especially, you need to stop commingling your funds because you are causing issues with liability. You probably started that LLC for the protection that it offers, but if you're commingling your funds, you no longer have that corporate veil of protection. Most lawyers don't tell you that, but it’s true!
The other thing I hear all the time is, “How do I pay myself if I have two separate bank accounts?” Well, super simple. You transfer money from your business account to your personal account. You can write yourself a check, or you can transfer those funds, either way! Those transactions are called owner’s draw.
Must-Do #2: Set Up Some Type of Bookkeeping System
I love QuickBooks Online, it's a great platform, but I also understand that it comes with a learning curve. You really need to know what you're doing in QuickBooks if that is the route that you're going to go. If you don't want to use QuickBooks Online, maybe you just need a spreadsheet. A spreadsheet could do just as much, as far as what you need for tax purposes. I actually have a spreadsheet that you guys can use to do that if you're not ready for QuickBooks - right here! Either way, you need something to keep up with your expenses and your income so that you know your profits and losses, and where you're spending.
Must-Do #3: Set Up Monthly Money Dates
So, it's not just important for you to set up the bookkeeping system, but it's even more important that you set up monthly money dates with yourself so that you can focus on your finances, keep your bookkeeping up to date, and analyze that data. Then, you can set goals and realistic targets, because you finally know your numbers.
I'm all about knowing your numbers. The numbers tell the story of your business. Everything that you do in your business relates back to your financial numbers - marketing, planning, services - everything goes back to your numbers. If you don't know your numbers, then you can't make calculated changes, right? You can make changes all day long, but they’re just whims,they're not calculated or strategic.
Must-Do #4: Organize your Receipts
You may not know this, but if you purchase something that's $75 or more, you have to have a receipt for that. If you're ever audited, you are going to need that receipt.
It's really easy to keep receipts and here's my trick. If you're not using QuickBooks Online, and you're just using a spreadsheet, I want you to make a Google Drive folder at the beginning of the year and just call it Tax Year 2022 Receipts, then each time you make a business purchase, snap a photo of the receipt and upload it to the Google Drive folder. Then you can get rid of the paper receipts because an online receipt will be sufficient for a tax audit.
Must-Do #5: Outsource
Maybe you've set up your systems before, you’ve tried to set up those money dates, but it just wasn't quite working for you. You're working so much in your business that you don't have the time to work on your finances, but you understand that it's important. Maybe you don't like finances in general, or you don't like numbers. That's okay! Maybe you just really enjoy the aspects of what you do in your business, and when you think of numbers, it just makes you cringe. If that’s you, then it is time to outsource because bookkeeping is not your zone of genius.
Outsourcing can look like so many different ways. Personally, I do customized proposals for all clients because everybody needs something different and it's not a one-size-fits-all. When you come to me and show me what your issues are, it's like going into the doctor. These are my ailments and my problems that need to be fixed, and then we can work on a plan of attack together.
Or maybe, you don't want anything to do with anything! You don't want to do bills, don't want to do invoices, don't want to do anything with finances. You just want to be told at the end of the month: Did I make money?
Maybe you are the type to say “You know, I can do this every month. But I don't know how to read it. I don't know how to analyze my data.” And maybe you need some tax strategy or profit strategy in your business, and we can work on that together as well.
I'm here to do all the above, depending on what you need in your business. So reach out! I’d love to chat with you to see how I can help you so that 2022 is not overwhelming for you. That you really start off 2022 on the right but that you're staying on top of your books throughout the year. Let’s start with a 20-minute call to chat through where you’re at right now, and where you want to be in 2022! Click here to find a time that works for you, and I’ll see you then!
