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The ABCs of Self-Employment Bookkeeping

The most forward-looking and successful business owners understand that accurate bookkeeping isn’t trivial. Your numbers – your financial data – tell very specific stories about your business.

Whether you are the CEO of You, LLC, or the President of Power as a Sole Proprietor, you need to have a healthy relationship with your finances, because how those stories read could have a big impact have on your business’ cash flow… and its future.

When you’re self-employed, especially when you’re just starting out, or when you’ve finally realized that your hobby has become your livelihood, it’s easy to get confused about how to keep track.

It’s our mission to help small business owners grow their businesses by understanding the story their numbers are telling them. So, here are the ABCs (well, at least up to the letter “G”) so you can begin to keep track and learn to read what those numbers say.

Automation – By using a cloud-based bookkeeping platform like QuickBooks Self-Employed, and integrating the right apps, you make invoicing and paying bills really easy. With all the time you save, you can be out building your business.

Budget – A business budget is essential to making strategic financial decisions around sustainable business growth. Track regular income, fixed costs and variable expenses over time to gain great insight.

Checkups – Regular checkups keep your financials healthy. When you put off your bookkeeping you end up with figures that simply don’t add up. Quick weekly reviews can help you avoid late fees and be sure you’re collecting what you’re owed in a timely manner.

Documentation – It’s critical that you document your spending and the best way to do that is to keep your receipts. They contain dates and expense details that will be very helpful for future reference. Use an app like ReceiptBank to both electronically store your receipts and have the data flow right into your cloud-based bookkeeping software with virtually #ZeroDataEntry.

Earning Quality – Have a plan for taking payments and managing your accounts receivable. Earning quality, calculated by how long it takes between earning your revenue and collecting on it, is very important to track. Otherwise, you can end up with a serious cash flow crunch. Real time insight into your cash flow allows you to make the right business decisions at the right times.

Forecasting - Monthly forecasting and accurate tracking help you understand how your business is performing. Comparing your forecast with your actual income and expenses can help you be proactive, rather than reactive, to your business needs.

Growth – Don’t wait until you’re overwhelmed to think about scaling. When you’re at the point where you simply don’t have any more time to spend on your business it may be too late. Develop your growth plan early so you can scale easily when it’s time.

 

While this alphabet can seem daunting, you don’t have to go-it-alone. There are a lot of resources online including the US Small Business Association, SCORE, and  Fit Small Business.

If you prefer to have a professional get you started, we can help. We’ll get your books in order, get you set up on a cloud-based bookkeeping platform, and even train you so you can take it from there!

One thought on “The ABCs of Self-Employment Bookkeeping

  1. Nice post! Self-employment can often be confusing, especially when you have a number of different suppliers and clients. Often, outsourcing your bookkeeping instead can be a big time-saver. Thanks for sharing your thoughts! I’m sure a lot of people will find this useful.

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