WOW! Here we are at the beginning of another new year and now we are faced with having to close our books for the year. Are you ready? Are your records all organized and ready for the simple process of closing the year out or do you have a mess of papers stuck in a box or file that need to be organized into some kind of order so that your accountant can make it happen?
Bookkeeping is one of our least favorite things to do as embroiderers! We did not start our embroidery business so that we could do bookkeeping! We are born creators, not bookkeepers, but unfortunately, it is part of owning a business and is a very necessary part of the business that we must be on top of! You may feel like you are drowning in paper work.
It is critical to organize every part of your business and your records must be organized for easy and accurate bookkeeping. Without good organization of your records it can become very overwhelming when you need to produce some important information and it can cause unnecessary stress in your personal life and your business.
Have you found yourself spending many days just before time to file your taxes trying to get everything organized? Trying to pull it all together at tax time when it is disorganized is really hard and time consuming, not to mention how frustrating it can be. You could be spending this time getting more jobs out, but instead you have to stop producing your embroidery and concentrate on the taxes in order to stay compliant with the government.
Your business generates a lot of paperwork and it can easily get out of control if you do not have a good system for taking care of it. This was a huge struggle for me until I realized that I could not continue to do it as I was and get my jobs out at the same time. I had to take some time out, stop the crazy disorganization of papers and get my books in order.
I had been told about systems where you can scan all of your paperwork and then dispose of it but I have not found this to be successful for me. I bought the scanner and spent a lot of time trying to get a good system figured out so that I could eliminate all of the paper but that did not work for me. It would be great if we could just throw all of that paper away, but unfortunately, we must keep a good share of it and file it in an organized manner so that it is easy to retrieve.
Keeping accurate financial records is necessary for the growth of your business. You need to be able to look back and compare one year to the next so that you can plan in a more efficient manner. You also need to know which area of your business is performing the best and in which area you are not making enough money. Without accurate records, this is impossible.
If you are new to bookkeeping and you have not started to use any type of accounting software you must first go through and organize all of your records. You must have them in order before you can even think about using any type of accounting software.
Start The Process of Organizing Your Bookkeeping Records
Step 1- Separate the receipts for your expenses and for your income. Make sure that you have every little piece of paper because it can make a difference at tax time.
Step 2– Take the pile of receipts of your expenses and separate them by the month. Do the same for your income.
Step 3– Separate the piles of expenses and income for the first month into piles of like kinds.
Step 4– Create a spreadsheet with columns of the like kinds for your expenses and add the receipts into each column that is applicable. By like kinds I mean, Office supplies, loan payments, travel expenses, etc.
Step 5– When finished with the month, place the receipts into a file folder marked by the Month and place the file folder in a file drawer. Keep one file drawer for this purpose only.
Step 6– Repeat this process for your income statements.
Step 7– Total each column of expenses for the month. Do the same step for your income.
Step 8- Repeat this process on a separate spreadsheet for each month.
Organizing them in this manner will make it easier for you to start the process of working with accounting software. I know that the term accounting software is scary if this is all new to you, but it really is very simple to use once you have your expenses and income organized.
Spread Sheet Ready To Go!
I have created a spread sheet that you are welcome to use to get this process started. It will be much easier than having to create it yourself. Fill in the form below and I will send you the Spreadsheet and you can start using it.
This spreadsheet will get you ready for starting to set up your bookkeeping system or get you ready for the end of your year and be able to give your accountant your spreadsheets. I worked with my spreadsheets for several years before I started using accounting software and it worked for me as my business was very young.
In today’s world, the accounting systems are very simple and it is smart to start using them right from the beginning of starting your business. I have created a program called Embroidery Business Bookkeeping System that teaches you how to set up your books for the apparel decorating business. This goes beyond embroidery and can be used in other areas like vinyl, DTG, screen printing and more. You want to have your books set up in such a way that you can tell in each area of your business where you are making money and where you have problems.
Once your accounting system is set up correctly, this is very simple. You will also be able to create your invoices quickly which helps you get paid quicker! You won't lay awake at night worrying about paper work! It will be taken care of!