Creating an Accounting System
Lesson 3 from: FAST CLASS: Put Your Money to Work: Take Control of Your Business’ FinancesDominique Broadway
Creating an Accounting System
Lesson 3 from: FAST CLASS: Put Your Money to Work: Take Control of Your Business’ FinancesDominique Broadway
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Creating an Accounting System
okay, so the 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 an 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, um what's gonna be your focus to reach these goals? And when it comes to setting financial goals and 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 and just getting my ideas out of my head onto paper and then from there, figuring out of these goals or do I don't want to, what do I want to accomplish this week, what I want to accomplish today, what I want to accomplish this year and sometimes even what I want to accomplish in this lifeti...
me, and from there taking that goal, 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 said, 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 it a million? 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 I 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 hobby, which a lot of 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 start at the top and say, you know what my goal this year is, $100,000. So let's say if my product is a we're gonna call it a widget a right, so maybe the goal of the, I want to have, you know sell widget a in which is a is $1000. So let's say if your goal was $100,000 now, you know you only need to sell 100 Widget AIDS to get to this $100,000. Now as you can see you can break this up into your individual respective um 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 gonna be paying you from via cash, they're gonna be paying you as a monthly subscription. Will it be um from invoices, will it be from online sales, will it be from point of sale which can also mean like me selling a book are selling this thing and you coming and buying it from me directly which may be um like from a coffee shop there all point of sale people come in, they buy it 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 these different income and expenses. Also you want to think about payment methods, will you be using a payment processor like paypal or stripe or using some sort of merchant processor are gonna take american express mastercard, discover Visa, whatever it may be are people gonna 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 the different money expert to say do this, do that, open one account, open seven accounts blah blah blah blah blah. And people a lot of times will take all these 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 resources. First of all 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 bookkeeping attract expenses all in one and created systems so that you're not frantically running around trying to use 17 systems that 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 can also set up a duplicate duplicate account and use it for your business as well. We also have Quickbooks which is awesome. And Quickbooks also integrates with Honey Book as well and it gives you the ability to track your income, track expenses. Um It's super easy. Even in self employed one you literally swipe left, swipe right, it's almost literally like using tender, swipe left if it's a personal expense, swipe right, visit business expense literally like using tender. And also quickbooks is great. You can pay your employees from it 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 wave 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 but you need to figure out which one works best for you. Okay now we've made a bunch of money in our business were rolling in the dough. We want to 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 or if your L. L. C. Especially a single member LLC or even if you have a partnership LLC, all you need to do, 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 when and how often you want to get paid. So I know I personally pay myself once a month, I get paid the same amount on the first day of the month every single month and it happens automatically. But if you prefer, you can pay yourself weekly, you can pay yourself twice a month. It's super easy. And to set that up all you need to do, um you can use a other services such as gusto um and other online payroll systems or you can a lot of times and go specifically to your business checking account and say hey I want to set up this automatic payment to expo to this specific account and have it happened monthly. And because if your L. C. R. Sole proprietor you don't necessarily have to worry about the taxes which we'll talk about later as if you're an employee um you'll be taking what they call a owners withdrawal and if you want a lot more resources 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.
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