Are you having trouble keeping track of your financial records? Do you even know why you should be keeping a record of your expenses and income? And what on earth should you be keeping track of in the first place? Well, look no further, because I am going to answer all of these questions for you!
There are so many different things that you could keep track of. What on earth should you take the time to bother with? Really, there are only two things: What you purchase, and your income.
- Purchases. What you spend on materials is probably the big one. Site fees. Shipping costs. Packaging costs. Regular fees (websites, magazines, other subscriptions, etc.)
- Income. From products. From donors.
I know that it sounds boring: Writing numbers down, doing math, keeping track of purchases and who bought what product for what price? But, there are actually a few different reasons for why you really do need to take the time to record everything.
- Tax purposes. Depending on the state that you live in, tax necessities for small business owners are going to vary. However, it is very definitely worth looking into, as you can deduct shipping costs, packaging costs, traveling to get materials, some material costs…Tax deductions are pretty nice, plus it’s a legal issue and could otherwise cost you a ton of pain if you DON’T
- Projection indicators. Keeping track of your profit versus your expenses can help you predict where your business will be in the next year (or five years if you are really ambitious). Overall, are you bringing in a profit, or suffering a loss? Then you can tell WHERE you are losing the money and take steps to remedy the problem.
- Trending sales. Keeping track of how many sales you make per month can indicate if there are any slow or exceptionally busier months. For example, November and December are big selling months for me, and the summer months are really slow. So, usually, I produce lots of new stuff during the summer months, and sell most of them during the winter months. If I didn’t keep track of my sales, it would be easy to miss this trend.
- Target audience. Who are you selling to? Maybe you market to facebook AND twitter, but as you keep track of who you are selling to, you notice that only facebook fans are purchasing your product.
- Important dates. Let’s say that you have purchased a year subscription to the host of your website. Well, keeping track of WHEN you paid that, will also let you know when it is time to renew that subscription.
Before you get overwhelmed and start stressing out about having not done this in the past, realize that it is easy to get started and relatively easy (if a bit time-consuming) to keep track of.
- Find the program that you like. Whether you are using excel, spreadsheet, graph paper, or other method…doesn’t matter, just choose one.
- Organize it. Have a specific place to put purchases, and a specific place to put income.
- Record. Keep receipts. Do NOT rely on your brain. Record everything just as soon as you are possibly able to.
- Do the math. Subtract, add, figure it all out.
- Keep the record. Print if off, hole punch it, keep it somewhere safe and where you will know where it is at.
See? That doesn’t sound to difficult does it? And now that you have a couple of reasons WHY to do it, maybe you will be more motivated to actually do it.