Is record keeping a priority in your Embroidery Business when you are first starting? When you first start your embroidery business record keeping is not usually the first item on your to do list unless you have an accounting or a bookkeeping background and that is not the norm for the majority of us. You are probably focusing on what you are going to sell, where you are going to get the products that you are going to sell and how you can actually get the customers coming in the door to buy your products!
The task of record keeping is usually put off until you have a need to produce some figures for a sales tax report, your year end taxes or maybe even to go to the bank to borrow some money! Record keeping is one of the last things on our mind and the one task that most people hate to do! We really cannot make any money spending time keeping the books, we need to use that time to produce our products, right?
You need to focus a good percentage of your time producing your products, but if you do not have good records, you have no way of measuring whether or not you are making any money and this does not make any sense. You are in business to make a profit, but if you have no idea as to whether you are actually making a profit or not, what is the purpose of your business?
When should I set up my books?
This needs to be done in the planning stages of your business. You need to be keeping records from the onset of creating your business. How much are you spending on the preparation? You have license and fees that you are paying out setting up your business. You have the expense of getting legal and accounting advice, or at least you should be getting good legal and accounting advice when you are first setting up your business!
What about the supplies that you are purchasing and all of the equipment? What about the preparation of the room or location of your business? These are all costs that need to be kept track of right from the very beginning.
Why is it important to work with an accountant?
When you are in the preparation and planning stage of your business you need to go over your plans with an accountant. They will be able to see if you have any holes, so to speak, in your plans and will be able to guide you in the right direction. Your accountant will be able to advise you on which accounting software to use and help you set up your books properly. In today‚’s world most businesses are using QuickBooks. It is very important to be using the same software as your accountant because it is will make easier during the reporting reports within your business. It will be quicker for them to create your statements and will be more cost effective for you.
You want to make sure and tell your accountant that you want to keep track of individual departments within your business so that this will be set up properly. Sometimes you have to educate your accountant as to exactly what you will be doing. They may not understand the embroidery business and how it is not like every other business and that you need to keep track of the individual departments within the business. What I mean by individual departments with Embroidery, Screen Printing, Heat Transfer, etc. You need to know at all times if you are actually making any money within each one and how much of a profit you are making. Without good record keeping you will have no idea if you are making a profit or losing money.
If you have started your business and do not yet have an accountant, I would advise that you make an appointment with one right away and discuss your situation. Before you visit an accountant, you will want to have all of your records in order so that they can see exactly where you are. This does not have to be complicated. You can use simple spread sheets like Excel to get this process started. Do not go to an accountant with a shoe box full of receipts. This is not the way to get started with an accountant and it will cost you more money. They may not be able categorize your expenses in the right area.
To keep it simple create a spread sheet for each department. This will make it easier to set up your books in the proper manner and you will have your expenses in the correct categories. This will also make it easier for your accountant to understand about each department.
Keeping accurate records is very important and at a glance, you will know how your embroidery business performed for the previous month. Good record keeping should be a priority from the very beginning of starting your embroidery business and a task that should be done by the business owner for at least 6 months before you delegate it to someone else. At that point you can start working with a bookkeeper to keep your records for you, but you need to have your month end report within the first 2weeks of the current month. By keeping track and staying on top of your record keeping you have a much better chance of having a successful embroidery business!.
For information on setting up your bookkeeping program to give you the records that you for your embroidery business, click here!