Lessons

Lesson Info

Bookkeeping for Income

The first thing you're going to do is you're going to send out any new invoices for stuff that you need to get paid for you've completed a job or you shipped out products um this is a number one always make sure you get paid to so many people put the invoicing office until like, the last thing um this should be the first thing you do always, uh, getting paid is priority number one that's how you stay in business. You guys okay? Um, soon as you put that invoice in the mail or your e mail or whatever, um you're going to record the date that you sent it and the date that it's due in your ledger and then, uh you are going to enter the due date in a calendar I don't care we use for your calendar. I have a lovely one that the local real estate company sends out every year that has, you know, photos of local landmarks um, it's sitting next to my desk, you can use a calendar app on your phone or your tablet or whatever. Um whatever is working for you currently as a calendar system, just add th...

is to it. You don't need to start a separate bookkeeping calendar whatever is already part of your workflow and comfortable for you is what you can use for this uh while you are entering in excuse me, these due dates uh you will be able to check that same calendar for what's due yes question you have like in your experience you have a preference should it be do apart, missy? Seven days, sixty days, thirty days? Um I should just always be consistent. Like you said in the past what? What? You're how long people have to pay you. So, um, those air called your payment terms, right? Um, how long people are allowed to pay you how long people have to take it to pay you when it comes to products? Uh, for me personally, any new customer that I have, uh, has to pay up front. You don't get credit, I don't know you. I've never worked with you before. Um and and I've been burned, um, I once had a new store open up in the east bay and, um, the new owner ordered a ton of products and, um so I said, you can you can pay the, um, you know, cash check money, order or you can do a, um c o d cash on delivery, right? Um I don't know you have never worked with you before, etcetera she said, okay, I'll do cash on delivery um which means that when the uh box arrives at the store she gives a check to the postman basically and then that check comes back to me so she still has to pay someone in order to get the package and then I got the check a few days later well, wouldn't you know it that check bounced so I called and I said hey, you're check bounds could you please send another payment for this um and that started a whole she's of course yes no I'm totally put it in the mail tomorrow um and then I never heard from her again she stopped taking my phone calls uh luckily this was somebody local so I was able to get in my car and just drive over there and when she had a store full of customers put the invoice on the desk when she was there manning the store and in front of all of those other people say uh you owe me for all of these products uh which she had already sold by the way so she had already made the money off of this it's not like I could go in there and get my my inventory back and then sell it to someone else she'd already sold the stuff um but she obviously did not have a good bookkeeping system in place she paid me out of a coffee can that had cash stuffed into it underneath the counter which would explain why the business was failing and she couldn't pay her bills. You guys are in a much better position than that. So, congratulations. You're already ahead of the game. Hooray! Uh, on top of which I put the, you know, the feed the bank charged me for trying to deposit a check that bounced. Um, I put on the fee for the gas and the time that it was taking me to go over there and collect on that det er and she did I mean, she was there in front of a bunch of customers, so she took a bunch of cash that was, like, three hundred dollars or something out of this coffee can under the counter, and she handed it to me, and I never did business with her again. Um, which is not to say that, you know, retailers are clients or anyone like that are total deadbeats, and they're not gonna pay you. And they're gonna look for ways to screw you. It's just that some people are not very good are organized about running their business, and you can't let your business suffer because of them. Um, so especially when it comes to products. You definitely want to make sure that you're especially the first time for reorders okay if you've worked with them a bunch of times and they want to pay you know at the end of the month they want to take a few weeks and you know that they're good for it that's fine and you do whatever's comfortable for you it doesn't have to be the same for all clients are all cos um I do a lot of client work and like I worked with one nonprofit that it's funded through what's called a fiscal sponsorship were basically there's a separate organization that funds them and they look at all the invoices and approve everything and they write the check so it takes minimum forty five to sixty days to get a check from them because that's how they're structured right it's a fiscal sponsorship there's nothing that can really do about it um if you work with huge retailers that have these big accounting department's very often they will demand net sixty terms net ninety terms they take their sweet time to send you a check on you'll need to factor that into your cash flow which we will cover um and then there are other people who were local who are like, you know, two weeks is fine and it's really up to you and your client were customer to come to that agreement about what payment terms you want extend to them but for anybody knew if I don't know you I need that money up front right? I already paid for these things you need to pay for them before you can get money from them um you know this idea to me that like we need to sell them before we can pay you is not cool with me personally um you know, there are plenty of other people who are totally fine with that when it comes tio clients and we'll talk about this later too when we talk about contracts on guy I have sample invoices and a sample contract for clients as part of those bonus materials so when we talk about that will be nice to have those in hand um for clients I always have a contract and it was collected deposit um if you're serious about having me do work for you, you'll pay for half of it up front and then even if god forbid the job goes horribly awry at least you're still walking away with half of that money um you never end up doing like a bunch of work and then coming away with nothing that's a nice question I know I went really on and on about that way we have more we do aneka james for example is asking do you not charge sale tax for items you sell out of two out of state buyers that's correct you do not charge uh sales tax to out of state buyers again it's not really the buyer it's the end user is the end customer where's the shipping address for the thing that you've sold online um and again if you're doing on event or like a craft fair out of state you may need to get a temporary sellers permit for that event and collect sales tax there even though you don't live there even though that's technically out of state for you um you may still need to collect sales tax if you're doing one of these events um but yes if you're selling online you collect sales tax on ly if thie uh shipping address is in the same state where you are registered as a business and if you have your business registered in multiple states I'm not sure how often this is gonna be the case for crafters but um if that's the case then you would need to collect sales tax and both of those locations and they'll have their own laws that a play separately of course um are there others now we had a lot of people asking another will be voting on those questions thank you for clarifying great. Yeah. Happy to um okay, so let's get back tio you're sort of uh this bookkeeping processors sort of order of operations here um we were on the calendar so as you're entering in the due dates for new invoices in your calendar that's a perfect opportunity to check what else is dio um and we'll look in the ledger too you have spots to put date due date paid um if you're going down your list and you see a big hole in the date paid where you don't have a date because it didn't get paid um you're definitely gonna want to follow up on that so that step five send reminders to any customers who have an invoice that's almost do um and certainly for anyone who hasn't invoice that's overdue um almost do is really nice because again a lot of small businesses have just a couple of people or one person doing everything and they maybe don't have it all together and super organized and it's not that they don't want to pay you on time it's not that they don't have the money it's just that they didn't even realize that this thing was due maybe it's been sitting in a stack of mail that they haven't opened in a whole week um who knows but uh you know the squeaky wheel gets the grease kind of thing applies here if you speak up and you're like hi just a friendly reminder that you have this payment due tomorrow I haven't seen anything yet um you're a lot more likely to get paid then someone else who's just kind of like I don't know maybe they paid it I'll look next week right? Did you have another question? Jackie yes, it was a felt like payment do you do a mix of like mel email phone calls as faras invoices once into the first envoys within also reminders so I try ah and tailor it to the client um however we've been communicating about the project is usually the way that I do uh the invoicing obviously by phone you can't send an invoice um but if, uh if they like to communicate by email, I like to send it by email all my invoices are pdf so in the end so I can either printed and mail it or I can just email it to someone as an attachment. Um which is really nice? And then I can either check my e mail go through my email when I'm doing my bookkeeping to put in my invoices or in the old days I used to print everything out base to print one copy of the invoice for my customer and I used to print one copy of the invoice for myself so that I had like a physical pile of bookkeeping to go through and everything was in one place now that I'm a little more comfortable with my bookkeeping I leave all of my email receipts in my e mail and I just file them in a little email box called bookkeeping actions and at the end of the month I go in there and all of the purchases I've made online all of the invoices I've sent to customers are all in there and I could just go through those and then I don't have to waste the paper and the ink and I can save the trees save the water um and I don't have so much stuff cluttering up my file boxes right? So that's kind of nice uh and then number six record any uh payments that you received and or deposits that you made so you've sent out all these invoices for this week and now you're starting to get the payments from last week's invoices that you sent out um so you've got some checks that came in the mail um you uh open those up um I like to write the date that I received it on there in case I look at it later um I tend well nowadays I only do my boy once a month but when I was selling retail I was doing it every week because it was so many individual products that it just would've gotten out of hand otherwise um so when I got something in the mail opened it up right on the either check stub you know, the remainder where you pull the checkoff um or the envelope sometimes if there was no check stub uh the date that I got it, who I got it from, how much the cheque was for, and the check number, so that I had that information somewhere after I deposited it to enter into my ledger, um, nowadays, it's. Less crucial, because the banks are all taking cheques, pictures of every deposited check. And so you have all that stuff in there. But I still like to know when I actually got the czech versus when I took it to the bank, because sometimes it's a while before I get time to go to the bank and deposit a bunch of checks at once. And I don't want to think that I had a bunch of cheques that were paid. You know, that we're overdue when they were actually on time kind of thing.