Business Strategies: Practical Advice for Entrepreneurs
The content of this blog is intended for educational purposes only. It is not a substitute for professional advice. Always seek the guidance of a qualified professional before making any financial decisions. The advice provided is general in nature and should be tailored to your specific entity type and individual circumstances.
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You did it! You came up with an idea and started your business. Whew... hard work done! Now sales are starting to come in, you are cranking out the much-desired product or service. Then one day, someone calls to see if their payment went through, or if they still owe you money. You start looking everywhere to find the information, but it is in that red notebook that is SOMEWHERE. Also in that red notebook are the receipts and tally of everything you have spent so far.. Now what?!
Lucky for you, my expertise in business and accounting far surpasses my skills in writing and design. As the proud owner of an accounting firm for over 14 years, I deeply love what I do. However, I craved a creative outlet, which led me here. The best tips are just a scroll away!
I will break down tips for service-based businesses vs. product-based businesses. A service-based business is one that provides services to customers rather than tangible products. These businesses focus on delivering value through their expertise, skills, and labor. Think of accountants, bookkeepers, consulting firms, freelancers for web-designers. A product-based business focuses on creating, producing, and selling tangible goods to customers. These businesses generate revenue by selling physical items that customers can see, touch, and use.
Overall business tips...
CREATE PROCESSES. I know when you are just starting out and a one person show that is the last thing you want to do or think is important. but I promise you... it will save you so much headache years down the road. I wish I would have done this from the beginning.
While creating these processes, keep in mind that they don't need to be elaborate. However, consider future needs as you develop them.
Your processes serve as a guide. They’re not set in stone but reflect how you want things done. As your business grows and evolves, these processes will too, and that's perfectly okay!
Setting these up from the start will ease the transition as you delegate tasks to employees and contractors.
Establish a filing system that suits your needs. For example, you could create a main folder named "Receipts," and within it, organize subfolders by month or vendor. Additionally, consider having a dedicated folder for "Customers" or any other categories that make sense for your workflow. Find what works best for you!
Develop a consistent naming system for all documents. I worked for a CPA over 10 years ago who was meticulous about file names. Initially, it felt cumbersome, but now, over a decade later, my employees use the same method. It simplifies finding documents. TRUST ME, it saves HOURS of searching.
If you have a service-based business, track your time meticulously, even if it means switching between 10 clients a day. I cannot stress this enough. As you grow and take on new clients, tracking your time helps you price your services accurately. I've had clients in business for over 10 years who realized they needed to hire employees but, because they hadn't tracked their time, they had no clue whether they needed part-time, full-time, or specific types of staff, or what they could afford to pay them. We track our time daily. This time tracking directly influences payroll and client invoices. Additionally, I can conduct detailed analyses to determine which services are most profitable.
Do not let all of your tasks live in your head, trust me, things will be forgotten. When you need to do something, put it in a task list. I am more of a paper and person kind of gal when it comes to this. As much as I love technology, I always go back to paper and pen. I created these templates to help keep track of everything I need to do. In addition, I created note pages that has been an absolute game changer when it comes to taking notes. Filling out the information at the top has helped me to stay organized and not lose notes. I don’t feel as scattered.
If you are interested in them send me a message and let me know you found them from this blog and I’ll give you a 50% discount.
Daily Task List & Notes: Stay Organized and On Top of Your To-Do List!
I struggled for years to try and keep track of all of the notes and clients tasks. I had notebooks everywhere, sticky notes everywhere so I created this and combined it all into what worked best for me. https://sinspiredmom.etsy.com
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Description text goes hThe answer is yes and no. This question depends on several factors, such as whether your company is a registered LLC or you're just starting the business and using your Social Security number. For the best advice, consult your CPA, tax professional, or business attorney, as requirements can vary by state. Here are some general tips:
Did you create an LLC? If the answer is yes, keep reading...
If you formed an LLC, then yes, you should open a separate business account to manage all business transactions. This means keeping all income and expenses in this account, separate from your personal finances.
Documents Needed: State requirements may vary, but you will likely need documents from your state and/or the IRS that prove ownership, the business name, address, etc.
Using a Social Security Number:
If you haven't created an LLC and are using your SSN, that's acceptable. Still, open a separate account (another personal account is fine) to keep business transactions separated from personal ones. This separation will make accounting much easier.
Credit Cards: Starting a business often requires extra capital. If personal credit cards are your only option to get started, it is okay use them. Ideally, designate one card solely for business purposes to simplify tracking. Documentation is vital as to what each purchase is for.
Tip: If you formed an LLC but use a personal checking account, mixing personal and business transactions could pierce the corporate veil. This means if your business gets sued, you, as the owner, might not be protected and could be personally liable. For more information on this consult a business attorney in your state. This is a good article to learn a little more about it Business Transactions: Legal Consequences of Piercing the Corporate Veil - Attorney Aaron Hall
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Description text goes Document, document, document. There are different ways to do this, and it really depends on what makes you comfortable and your how your systems are set up. It also depends on what type of business you have. If you are selling products then you will probably have significantly more purchases than someone with a service-based business. I always advise clients to create a folder to save receipts in. Dropbox, Doogle Drive, Onedrive etc. Whichever program you decide to use connect it to your phone so when you purchase something, office supplies, gas etc., you can snap a picture of your receipt and save it in your phone as back up.
I mean, you can keep them in a shoe box, but come tax time it isn’t fun going through it all.
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Well... this again depends on your business, the volume of transactions and even more complex reasons. Are you a service-based business or selling products?
Let's start with service-based businesses.
Most service-based businesses will submit invoices to their customers for payment. Which means you will have to create an invoice and then submit it to them for payment. There are instances where invoices will not have to be submitted but that's a whole other post. If you are submitting invoices there are so many templates that you can use to submit your invoices without any other software. And this could work! I would come up with the best system for you to do so. Here are some key points when using invoices.
Keep your invoicing numbers consistent. It is so much easier to keep track of if it is in a consistent order.
Whenever you receive a payment make sure to mark the invoice as paid. It can be as simple as typing paid with the date on the invoice.
Service-based businesses are generally easier to keep track without the use of software because you do not have as many expenses, or sales taxes. Your time is your expense.
Product-based businesses can sometimes be a little tricky for a few reasons. They have sales taxes which must be figured out and then remitted, figuring out the profit on each item, inventory etc. It is totally possible to do but for this type of business I would advise to get a program to help keep track of everything especially sales taxes.
There are so many different software that you can use. Programs I am familiar with are:
Quickbooks
Zoho
Shopify
Etsy
Using these programs will help you with tracking sales tax, and some of them will even remit the sales taxes for you.
If you aren't ready for a program, you can definitely use excel or something like it to keep track of all of the things mentioned above. Since sales taxes are involved, this is one of the main reasons why I advise a program that will calculate sales taxes for you. Not to mention from time to time the rates will change and if you didn't realize it then the wrong amount of taxes will be collected which could cost you money.
Reconcile your account every. single. month. Whether or not you are using a program it is still good to review all of the transactions. This helps to make sure you have received all of your payments, and that you aren’t double paying for things. Remember when we had the physical check registers and would write down every check that we wrote in the register book? Then each month look at our bank statement and check off every check that cleared. That is what you are doing. This is a HUGE step that people skip doing but it is one of the most IMPORTANT for many reasons. One of them being cash flow. Let’s say you paid something with a check and you look at your bank account and see you have xx amount of dollars. You pay a bill, but didn’t realize that check hadn’t cleared. Then the next day you get into your account to realize it has overdrawn or you are just short because you didn’t realize it hadn’t cleared so now the purchase you were going to make for supplies cannot be made. This is when businesses really start to struggle and lose site of their cashflow. goes here
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I hate saying this again.. but it really depends on how your business structure is set up.
You do not have to process payroll or have a payroll company. You can simply transfer the funds from your business account to your personal account. This would be considered an owner's draw and would not be on your Profit and Loss, but instead it would be on your balance sheet.
Remember: Do not use your business account for personal use.
Short version: Profit and Loss is your income and expenses only. While paying yourself is technically an expense to the business, it would go on your balance sheet as an equity account. You own the business, it goes to your equity. (This is a whole other post as well about the differences and breakdowns of the 2).
I know this is a lot of information, and I hope this is helpful to you with your next steps in your business. You’ve got this! Don’t let this part of it stop you from growing, or even starting your business. The sky is the limit!
Keep checking back for more business tips and let me know if this was a helpful guide!
