Heyyy rockstar entrepreneur. So, let's chat a little about your accounting today, shall we? I can already hear you falling asleep, so I'll keep this short. But, I really want to take a little bit of time to share why paying attention to your monies is important. I mean if you want to be rich and famous, you're going to have to keep an eye on your money. Right?
One of the questions I hear often from sparkly new business owners, is whether or not they need to use an accounting (please not I use accounting and bookkeeping interchangeably in this post) program. Usually when we first start a business, funds are tight and we can't afford to hire professionals like accountants.
So the question becomes should you use an accounting program before you hire an accountant or should you wait?
My rule of thumb is the moment you spend your first dollar on your business, you should start using a program to track your expenses and the money you will start bringing in.
If you recently launched a business and plan on making this a way to support your lifestyle, setting up a bookkeeping program helps you establish a frame of mind that says "this for real" and the cash you earn is to be taken seriously. Otherwise, you run the risk of maintaining a "this is just a hobby" mode which will affect the way you present your service or product to others.
And ultimately how much money you make and can spend on new Tieks shoes. (if you haven't heard of Tieks, they are seriously the best shoes EVER).
In addition to mindset, there are three "practical" reasons to use an accounting program.
- To secure financing- If you are looking to get a loan or get funding from an investor, they will want to see comprehensive financial reports that are as accurate as possible. A bookkeeping program allows you to run these programs easily and shows that you are "serious" about your business.
- End of year tax filing- At some point you're going to want to hire a professional . The more difficult it is for them to gather the data from different sources like Excel to bank statements to Etsy accounts- the more time it will take them and the more money it will cost you to work with them.
- Creating a financial plan- a bookkeeping program keeps all of your information in one place so you can figure out ways to grow your business and create an actual financial plan. Especially when you're ready to expand and offer a new service/product this information is especially helpful.
I want to hear from you! Do you use an accounting program for your business? If so, which one? If not, when do you plan on setting one up? Leave a comment below and let me know.
Danetha Doe is a product launch strategist and total geek about cloud accounting. Her consulting practice helps companies develop a comprehensive financial plan for rolling out new products and services. She has worked with brands such as Google and Neutrogena.
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