Half the battle when it comes to managing your finances is about being organized and prepared. You never know when you're going to need that piece of information and if you don't know where it is can create that extra bout of anxiety or scrambling through your inbox and the bottom of one of your purses finding it.
Here are three ways to keep your business neat, tidy, and most importantly, separate!
OPEN A BUSINESS BANK ACCOUNT
I cannot express how having a separate bank account for your business can provide so much clarity. Keeping this separate will not muddy the waters when trying to calculate how much you spend and have in your business.
It also makes easy work for your CPA which is key to keeping your accounting fees low. The less reconciling they have to complete, to figure out what is considered personal expense and what is business related, the easier tax season will be for all.
USE AN ACCOUNTING SYSTEM
it baffles me when I speak with business owners and they don't use an accounting system, especially when there are a lot of free options. For me, a spreadsheet doesn't count unless you really know how to use it and are disciplined to update it with all the right information.
These days, your accounting system can do a lot of the work for you. There are capabilities that allow so much automation when starting your business. You can connect it to your bank account which will feed transactions into the system, and all you have to do is make sure it's categorized. Even then, if you have recurring charges, once you categorize one it will recognize all future charges of the same name and record it against that account.
You will be able to clearly see your financial information to help you make decisions, and it makes for easy work once tax season comes into play. You just download your profit and loss report and send that to your CPA.
Once your business starts to grow, you can easily hand this task to someone else (wink wink).
Keeping a box of receipts is not a system. You have no idea what is in there, and in the event that you need to find that receipt from 6 months ago, you're going to wish you had organized it sooner.
The first step is making sure that you keep copies of all your receipts; not matter how much. It's important to get into the habit of picking up that piece of paper, or storing email confirmations in a separate folder. What's great is now you can keep an electronic version on your computer so you don't need to have boxes or folders cluttering up the office.
There are different ways to keep your information stored in a formulated fashion. Google Drive or Dropbox are my preferred over folders on your computer. Data in the cloud is the way forward, as you will be able access your information whenever or wherever you are. Some accounting systems allow you to keep copies of the receipt in the system itself but I find it that can be cumbersome when you're trying to find it at a later date.
Whichever method you decide make sure you sort by month and have clear file names so it's easy to find.
Start looking at how you have structured your finances and see where you can implement the above processes to improve efficiency.