The best resolutions are the ones you stick with, and the ones you stick with are the ones that bring visible, positive results. Bookkeeping is one to stick with. If the very thought normally makes you yawn, this post will show you three resolutions you can make to turn a bookkeeping chore into something really valuable.
Create a Simple System
Bookkeeping systems have a reputation for being complicated, but they really don’t have to be. Choose the format that suits you best whether it’s a notebook, your computer or an online accounts subscription. If you’re working with Excel or a notebook, all you need is four columns to track income and outgoings.
Head the columns with Date, Item, Cost and Sales. The ‘cost’ column is for things you paid for, from stock to stationery and everything in between. The ‘sales’ column is where you record money coming in. It’s unlikely you’ll have an entry in both columns for the same item.
This is very basic and as you go on you may want to add more detail, such as categories of sales or purchases.
You could also have a fifth column to keep a running balance, which makes it easier to cross check transactions against your bank statement. Fill in the columns on a regular basis. Every day if you have a lot of transactions, once a week if you have just a few.
If you struggle with creating a system on your own, don’t be scared to ask a professional bookkeeper or accountant for some help. Once you have the basics sorted out, staying up to date is easy.
Save and Store Receipts for Everything
Paper receipts are still useful, although these days you can snap a photo with your phone or camera and store the digital file. If you buy something and don’t get offered a receipt, ask for one. Once you’ve transferred the information on them into your bookkeeping system, keep paper receipts in a folder and start a new folder each month. For digital records, create a similar folder system either on your own hard drive or in cloud storage. Ideally both, so you have a backup. Remember to label the folders with names you’ll remember. The month and year are good starting places.
Take care of receipts regularly rather than letting them pile up. Going through a handful only takes a few minutes whereas a mountainous stack can be overwhelming.
Find the Hidden Information in the Numbers
Bookkeeping isn’t just a legal requirement when you work for yourself, it’s a rich seam of information that can save you money.
After just a couple of months of systematically filling in columns, you can see where money is going and where it’s coming from. You can see which areas of work are most profitable and which are costing you more than they’re worth, then figure out ways to either eliminate those things or restructure prices to reflect the effort you put in.
The opportunity to work from home is a blessing for many mums, and what starts out as a side hustle can easily turn into a profitable venture. Resolving to keep a simple but effective bookkeeping system puts you in control and prevents the stress of never really knowing where you’re at with money.
- This is a collaborative post.