I have to confess that I am often my own worst enemy, especially when it comes to my art and work.
One thing I really need to focus on this year is turning my creative endeavors from whatever they are now into a Business with a capital B. Getting and staying organized with my supplies, time management, and finances are top priorities. I’ve still got boxes from the studio move I haven’t put away (need more shelving) and am still discovering things that are missing/broken after the break-in. That’s just silly.
One great place to start is with the finances angle. I know most of these tips, but I have to admit I’m not always the best at implementing them.
Since I know several people who are also interested in turning their hobbies into a real honest-to-goodness job, I thought I’d share this awesome article I found via (ok, I have no idea where I found this) over on the ThinkBakery blog: (There’s a TON more useful info over there, so please don’t rely on my cut and paste… go check them out!)
(creative commons flickr photo from user bjmccray)
1) Know the very basic.
It might go without saying…but then again it might not.
Income – Expenses = Profit
2) Separate your business funds from your personal funds.
Bank, PayPal & credit cards. The books are SO much easier to balance when there are only related transactions to deal with.
3) Downloading detail is your friend.
Etsy, PayPal and probably your bank and credit cards have the option to download transaction detail in to excel and/or QuickBooks. USE THIS OPTION! The less data entry you have to do, the more time and accuracy you gain.
4) Keep your paper (and computer files) organized.
You don’t need to enter your transactions in to an accounting program daily. But, if you keep all the information organized in between entry points, entry will go much smoother.
5) Accounting software: Start simple…& free.
Start with the free versions and work your way up as your business grows. Some of the options I endorse (and work closely with, so feel free to contact me if you have questions):
6) Use the Schedule C as a guide for your expense categories.
It is not the end-all, be-all of expense categories, but it is a great starting point. Use these categories and then add in your own subcategories as necessary for your business. http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
7) Reconcile your accounts.
Doing this assures you know what is coming and going from your bank/PayPal accounts.
8 ) Don’t do your bookkeeping FOR the IRS.
Many owners do their bookkeeping ‘for’ the tax man. This is backwards. You do your bookkeeping for YOU and as a result, can easily share the required info with the tax man.
9) When in doubt, research the answer.
Just be sure you are using a reliable resource when doing your research. Some that I use often are:
The QuickBooks Community Forum (answers to many questions beyond just QB) HERE: http://community.intuit.com/quickbooks
The Small Business Administration HERE http://www.sba.gov/
10) Review and use.
After taking the time to create accurate financial reports, be sure to USE them! Financial reports are the basis of sound business decisions. Knowing the health of your business allows you to make good choices for your business’ future.