If there were one thing I wish I started earlier, it would be doing my own accounts.
It took me over a year and a half to get my s#!t together and confront an accountant to help me with my tax payments.
I was lucky, by the time I got around to doing my accounts, business was booming. But looking back I realised I could have made life a lot easier by keeping on top of it from the beginning.
There are a few reasons why doing your accounts is important for your business, and I’ll quickly lay them out for you because no one really likes talking about Accounting. Let’s get down to business!
#1. Know If You’re Winning
The most important is to see if you’re actually making a profit or if you’re making a loss. Having a simple Profit and Loss Statement will help you identify whether you’re profiting or not; whether that’s annual, semi-annual, quarterly, or monthly.
I remember when I made my first commission online. I thought I was the king of the world. Though in reality, I had a long way to go. I spent $800 on Facebook Ads, thousands on different programs, courses, and monthly subscriptions to set up my blog. …And I had made just $25.
I had people following me which was cool. But no way to monetize that following. Once I saw my numbers I stopped and changed the focus of my marketing to a few specific affiliate offers that worked and doubled down in them.
#2. Cut Costs
Secondly, seeing all of your expenses laid out in front of you can help you identify where you can cut some costs. I found that I wasted a LOT of money on things I didn’t need or use. If only I paid closer attention to what was making me money, and what was costing me money, then I would be a lot better off than I am today.
Monthly subscription payments can add up big time!
There’s that little thing called TAX. When you work for yourself, you have to pay your own tax. There’s no more employer to do it all for you. Seeing your profits will help you calculate how much you should be putting away for the tax payments later on.
Save yourself getting bit in the butt by the tax man and put some $$$ aside! – Thank me later for this one 😉
If you leave it too long and have to play catch up, going through every transaction you made over the previous two years will be the most mind numbing task you will ever endure.
Good news though, setting up your accounts can be easy!
When you start, connect your bank accounts to import your statements from the date you first started spending money towards setting up your business. You will be able to write this off your tax bill later.
Then once every month or so, log in and reconcile all of your transactions (which means, tell Xero whatever that $23 purchase was, or where that lump of money came from) so everything’s accounted for. You can do this on your phone.
Once you have done this, you can check the health of your business very quickly. And it won’t be long before you realise how quickly those subscriptions can add up.
Doing your own accounts will save you a lot of money, and time, but if you’re starting your own business from the ground up and you haven’t made any money yet, I understand if you don’t want to spend more money to manage your accounts just yet…
What I suggest doing is to start simple spreadsheet in Google Sheets, Excel, or Apple Numbers to keep track of your income and expenses. Once you are ready, you can then transfer that sheet into Xero and you will be ready to rock!
I know …A post on accounts, BORING! – Trust me on this one. Get this sorted and you will find it much easier when the time comes to scale your advertising campaigns. 👍
p.s I personally use Xero which is why I recommend it. All opinions are my own. I am sure there are many great accounting programs out there but Xero is my program of choice. All links are affiliated meaning if you purchase something I talk about, I will receive a small commission from the company for recommending them. Helps to keep me travelling 😉