Skip to main content

Put Your Money to Work: Take Control of Your Business’ Finances

Lesson 3 of 6

Creating an Accounting System

 

Put Your Money to Work: Take Control of Your Business’ Finances

Lesson 3 of 6

Creating an Accounting System

 

Lesson Info

Creating an Accounting System

Okay, so next topic we're gonna talk about is making money and tracking it. So we figured out how to get some funds, and now we're going to try to make some money. So when it comes to making money, the first thing you want to do or managing money in general is setting financial goals. So, as entrepreneur, you have to make sure that you know how much money you want to bring in. How much money do you want to make? What's gonna be your focus to reach these goals? And when it comes to setting financial goals in goal setting in general, one of the things I like to do all the time is do a brain dump. And that's basically me sitting down with a blank piece of paper. No computers, no notifications, just getting my ideas out of my head onto paper. And then from there, figuring out off these goals, why don't you go? I want accomplish this week what I want accomplish today. We're I won't accomplish this year and sometimes even what I want accomplish in this lifetime and from there taking that goa...

l, writing out a list of things that you want to make happen, putting dates with it and making sure all this is corresponding to your respective financial goals. This is a really great strategy to make sure that you're hitting your financial goals for your business and also for your personal life on a daily basis. So, like I say, how much money do you want to make this year? This is a question that often when I asked, entrepreneurs are like, I don't know. I mean, I just I want to make money, But like, I guess I never really thought about it. And you need to figure out what that number is. What that magic number is. Is it 100,000? Is it? 200,000 is in a 1,000,000. Is it 20 million? Whatever it is, you have to figure out what that big number is, and then start breaking it down. Since you can reach this goal now, this is a really great, just kind of action plan that you can put together to reach this bigger financial goal of yours. So, like I said, most entrepreneurs they're like, Oh, I have a skill or have a passion, or I do this blah blah, blah thing. Well, right, but no one stops to think about how much money do I really need to make to turn this into a business so that it's not just a really, really expensive hoppy, which will have people's businesses are. So this cool little action playing can give you a nice layout of how you can reach this bigger number. So let's say if we started the top and say, You know what? My goal this year is $100,000. So let's say if my product is a gonna call it a widget A right. So maybe the gold be I want to have, you know, sell Ah, widget A and widget A is $1000. So let's say if your goal waas $100, now, you know you Onley need to sell ah 100 which it aids to get to this $100,000. As you can see, you can break this up into your individual respective products and services. But as you can see once you break it down that way, you know you need to sell 100 of these. You have a whole year, you can break it up, sell 10 a month and exceed your revenue goal, so hopefully you can use this income action plan. Like I said, it's a very simple layout. You can make it way more sophisticated and complicated if you want to, but make sure you know how many of each thing you need to sell to reach your income goal for the year now accepting payments. So when you're thinking about tracking your income and tracking all those different types of things, you want to make sure that you figure out how you want people to pay. You are going to be paying you from via cash. Are they going to be paying you as a monthly subscription? Will it be from invoices? Will it be from online sales? Will it be from point of sale, which can also mean, like me selling a book or selling this thing and you coming and buying it from me directly, which may be like from a coffee shop there, all point of sale. People come in, they buy, and that's how the transaction happens. So you need to identify exactly how people will be paying you so that you can put a system in place to track all this different income and expenses. Also, you want to think about payment methods. Will you be using a payment processor like a pay power or stripe or using some sort of merchant processor? You gonna take American Express? MasterCard, Discover Visa? Whatever it may be? Are people going to be sending checks? These are all things you need to think about as you're starting to put your accounting system in place now tracking income and expenses So there's not. There's no one size fits all when it comes to money. Now, as you know, you held these from money experts that say, Do this, Do that. Open one account, open seven accounts, blah, blah, blah, blah, blah in people. A lot of times will take all of those values and really start doing all of it, which were really just confused. The heck out of them. They're like, Oh, my gosh, I'm doing too much at once. So you have to realize there's no one size fits all when it comes to money, and you need to figure out which system is gonna work best for you and your business support to support your overall needs. So these are some of our favorite accounting. Resource is first, while we have Honey book. Honey book is awesome because it's all in one tool, which will allow you to send contracts, accept payments. Do the book could be a track expenses all in one, and create a system so that you're not frantically running around trying to use 17 systems and make this happen. You can use just one. Some other really great tools are meant dot com, which is great for tracking your income and expenses on a personal level. But you could also set up a do politic duplicate account and use it for your business as well. We also have QuickBooks, which is awesome, and QuickBooks also integrates with ah, honey book as well, and it gives you the ability to track your income track expenses. It's super easy. Even this self employed one. You literally swipe left, swipe right. It's almost literally like using tender sweb laugh. It is a personal expense. Why, right? Is a business expense literally like using tender and also QuickBooks is great. You can pay your employees from except invoices. Awesome. Like I said, it does integrate with Honey book. Another great one is fresh books. Fresh books is awesome. It's a great invoicing tool. They also have the ability to track expenses as well. And then we have way with which is another accounting system or app that you can use to track your expenses. So, like I said, there's no one size fits all when it comes to your money's, but you need to figure out which one works best for you. Okay, now we've made a bunch of money in our business rolling in the dough. We want toe finally start paying ourselves. That's the goal, right? So when it comes to paying yourself, keep it super simple. People make it really, really complicated. If you're a sole proprietor, if you're LLC, especially a single member LoC, or even if you have a partnership, loc all you need to dio going back to the beginning, creating a budget, determining how much money your business is bringing in what your expenses are and how much you can afford to pay yourself. This is also why you want to make sure that you're creating a personal budget in addition to your business budget, because you need to know how much money you need to actually live off a. So basically create your budget first and determine win and how often you want to get paid. So I know I personally pay myself once a month. I get paid the same amount in the first day of the month every single month, and it happens automatically. But if you prefer, you can pray yourself weekly. We could pay yourself twice a month. It's super easy. And to set that up all you need to dio you can use a other services, such as gusto and other online payroll systems. Or you get a lot of times and go specifically to your business checking account and say, Hey, I want to set up this automatic payment to X. It's to the specific account and have it happen monthly. And because if your LoC or sole proprietor you don't necessarily have to worry about the taxes, which will talk about later as if you're an employee, you be taking what they call a owners withdrawal. And if you want a lot more resource is and if you want to set up a very specific overall accounting strategy, I definitely recommend the book profit First. It's amazing it's gonna help take you step by step, and that's really a good home homework assignment for you to delve into your finances more and get an exact system in place.

Class Description


Brought to you in partnership with

What’s holding you back from financial planning? Some people are completely focused on creating in the now and not looking towards the future. Others feel guilty when charging more for their services. By understanding your relationship with money and finances, you can unlock your worth and make your business successful. Award-winning personal finance coach Dominique Broadway demystifies how finances work so you can:

  • Understand how to sell your services

  • Understand how to structure your business to meet your financial goals

  • Run your business with a cash-flow-positive perspective

  • Have the knowledge and confidence to set your retirement strategy in motion today

Ready to start tracking your invoices, payments and expenses all in one place? Click here to start your free 7-day HoneyBook trial.


Reviews

KimberlyAnnMurphy
 

Wow! What helpful information!

Carlos Figueiredo
 

Thank you for the insight!

Bea Chan
 

This was well detailed and explained in an easy-to understand manner.