The worst mistake you can make as a professional is to ignore your finances.
We all want to make more money, but keeping track of our finances can be a headache; Anyone who is really successful with money knows how important bookkeeping can be.
As business professionals having adequate accounting knowledge is very important as it can influence our decisions, and this article will share some 7 accounting tips to help you take charge of your finances.
1. Plan your monthly budget carefully
It sounds like a trivial piece of advice, but you can save thousands of dollars every month that you follow it.
If you have no idea how much you spent monthly in the last 6 months, then you are probably wasting a lot of money. I know it sounds funny, but a lot of us don’t have a clue what our spending money is.
Take a journal now and track your spending for the next monthâ¦ down to the smallest detail.
Compare your expenses with your income and look for ways to cut unnecessary costs for good. Once you figure this out, plan your monthly budget and follow it religiously.
No matter what you need, make sure it doesn’t go over your monthly budget.
Keeping a monthly budget can seem overwhelming at first, but eventually you’ll find it will save your life.
2. Keep your accounts separate
This is especially important if you are a sole proprietorship or if you are the primary person behind your business.
No matter what your motivation or your ideals, keeping your business and personal affairs separate will help you immensely.
Make sure you do not conduct personal transactions through your business account and do not conduct business transactions through your personal account, regardless of the situation.
Many people today are experiencing financial problems because they have a hard time differentiating between business and personal funds and as a result, they use the money they get as they see fit.
If you are a sole proprietorship, pay yourself a salary; know what you really need to support yourself, differentiate reckless spending, and pay yourself a set salary each month.
This will help you know where you are at, allow you to invest your money in other businesses and significantly grow your business.
3. Hire a chartered accountant
Depending on the budget, size and location of your business, hiring a accountant (CPA) might be the best thing to do right now.
I’ve tried it a few times, and I can tell you that one of the things I hate the most is counting my money, tracking my spending, and keeping a budget; yet, these things are very important to the success of a business.
The question is whether it is worth it or not.
How much does not keeping proper bookkeeping cost your business each month? Do you think you can pay an accountant and still have something? Consider this, then create a budget for an accountant.
Hiring an accountant might seem like a waste of money right now, but you’ll find it much more profitable in the long run.
4. Use a billing system
As a freelance or professional, how do you get paid?
Is there a way to keep track of every amount you receive?
If not, create one, and if you find it difficult, you should start using a billing system.
There are dozens of great services online that let you create an invoice and get paid, and most of these services will work regardless of your location or the size of your business.
You can also keep a spreadsheet showing your income and expenses each month so that you have enough data to analyze regularly.
One of the best ways to save your business is to watch income and expenses, and nothing makes that easier than a billing system.
Payment systems like Paypal can do the job, but using a service like Freshbooks makes things better.
5. Avoid debt or procrastination of payments as much as possible.
If you decide to pay someone for services rendered or to use a service, make sure you never delay payments.
Debt can threaten the very existence of your business, and the best thing you can do is avoid it before it surface.
Do not delay in making payments for services rendered and make sure your debts are paid on time.
6. Set aside money for taxes on a regular basis
The idea is usually to wait until the time of the year when taxes are paid and start looking for ways to pay your taxes quickly.
Although it sounds easy, it is usually not effective.
Not paying your taxes threatens your business and you can never predict the future.
You might think you’ll have enough to pay your taxes when the time comes based on your estimated business growth, but you’re never sure what can happen.
God forbid, your business might experience downward growth towards the end of the year, and the government doesn’t care.
Set aside tax money each month and make sure your taxes are kept properly.
There are a lot of threats to the success of a business, but you should never offend the government.
7. Create online backups of your files
The worst thing that can happen to you is a sudden crash of your hard drive that removes all important files including your accounts, or a flood that removes all of your ledgers.
The internet has made things easy and you can make sure that you are always safe by making constant backups of your accounts.
Make sure you don’t have all of your backups in one place, and make sure you only back up to a reputable site.
To properly implement the tips above, you need the right tools. Here are 4 tools you should use to take care of your bookkeeping.
1. Freshbooks: If you want to support your business with the right invoicing tool, be sure to check out Freshbooks. Freshbooks is currently the best invoicing tool available to me, and it integrates easily with all of the major payment services available online.
2. Quick books: Another great invoicing software, and an alternative to Freshbooks.
3. Drop box: If you want to back up your files and sync them across multiple computers, Dropbox is a great option for you.
4. I drive: An alternative to dropbox, but more efficient because it supports automatic backups. All you need to do is install the iDrive software on your computer, select the folders and files you want to back up automatically, and then select the time you want the backup to take place. iDrive will take care of the rest for you and you never have to worry about losing your files.