Regardless if your small businesses is big or small, it is important to track your income and expenses properly. In this post, we’ll help small businesses understand the basics.
Many creators simply use excel to track their income and expenses. That may work if you only have a small list of items to track, but once you get over 20 or 30, it starts to make sense to use accounting software.
Two options that we like are Xero.com and Freshbooks.com. Both sync with your business bank account so that you can track and reconcile all money going into and out of your business. Then, at the end of the year, you can use that software to generate the reports you (and your accountant) need to file your taxes.
When tracking income, it can be helpful to tag or organize the income into different “buckets.” For example, you might track logo design as one bucket and website design in another so that you can have a better understanding of what kind of work makes you the most money.
When tracking expenses, it is smart to create rules in your accounting software to make reconciling your transactions quick and easy. For example, if you pay Gsuite the same amount of money each month for your email, you can set a rule to automate the reconciliation of that line item each month.
Also, be sure to take advantage of the software’s mobile app to take photos of receipts so that you can easily match the line item to the receipt later when reconciling your accounts.
There’s so much more to learn! Here are a few related guides you should read: