Are you ready to start?
“Pathway to €5k Profit” – Are you ready to start? (1 of 5)
Setting up your systems and Processes
Right, you’re in business for a couple of years and you are tired of leaving your bookkeeping to the last minute. Yet, you struggle at starting and the ‘how to’ when it comes to sorting out your receipts.
Bookkeeping refers to the record-keeping aspects of accounting. It is recording (or making a list) of all your sales and purchases. Take the time now to set up a weekly bookkeeping practice and you will reap the benefits at the end of the year when you want to review how well (or badly) your company did. It also enables you to file your tax form early, find out what you owe and minimise surprises.
Over the next five weeks I will walk you through the basics and the ‘how’ of setting up a simple bookkeeping system yourself.
You can start with a pen and paper or excel spreadsheet, whatever works best for you.
Week 1 Getting Started
While bookkeeping refers to keeping records for all of your business transactions (Sales, Bank AND Purchases), most people like to start with their expenses and purchases. This can be because you start to buy things before you start selling, or you think you can keep track of sales easier, whatever the reason, today we are going to look at so recording our purchases.
Purchases and Expenses
Some people like to separate expenses that they incur ‘on the run’, items like petrol or stationery, where a till receipt is used a proof of purchase and invoices they get through the post or email. Where you do or don’t both are treated they same from a record keeping point of view. Follow the following steps to help keep things clear:
- Put your receipts/invoices in date order
- Give each piece of paper a unique number (optional)
- Give each receipt/invoice a line in your copybook or spreadsheet
- Record the date of purchase
- Record the unique number if given
- Record the name of the supplier/vendor
- Record the full cost of the item – including VAT
- Decide what type of spending it is i.e. subscription, travel etc and enter the amount in the appropriate column – excluding VAT if you are registered for VAT, including VAT if you are not.
- Put the VAT in a VAT column if applicable
- And repeat until you have entered in all of your expenses & purchases.
Once you have done this for a week, look back over your spending. Notice which expenses are going to repeat in the next week or month. Notice where did you spend more than you though. Have you expenses that you know are not there but need to be included next week?
As the weeks go by, continue to record and keep your ‘books’ upto date. However, always keep 10 minutes at the end to look over what you have spend, particularly at the expenses you handed planned. Can you start to notice a pattern?
When to do your bookkeeping
On my course ‘Fall in Love with Finance’, one of the biggest struggles my clients have, is creating the space for their bookkeeping. It is something that I spend some time helping them with, because, once you get this into your routine, it really starts to become start of your business.
#FinanceFriday is something I’ve set up in my Facebook Group ‘Understanding Your Numbers’ for this purpose. I want to encourage entrepreneurs to get their coffee come have a quick chat with me and then settle down for 30 minutes and catch up with their books. Ideally do this at 10.30 and if you have any questions come and chat to me @ 11.
If Friday’s don’t work for you, choose a day that does. You will be amaze how quickly your patterns will emerge once you do the books regularly.
As always I am happy to help, so get in touch:
Grab a FREE 15 minute consultation here
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If you have questions or comments, I’d love your feed back, contact me here.
I hope you are living your best life.
Till next time.