10 Accounting Tips for Female Entrepreneurs | Amy Northard
10 Accounting Tips for the Female Entrepreneur
Bookkeeping and taxes can be overwhelming. This blog covers the main tips on how to get organized with your business books and ways to be prepared for tax season. As creatives, this might not be our most favorite part of our jobs, but if we can stay ahead and implement these accounting strategies by Amy Northard, we will be set up for success
Meet : Amy Northard, The Accountant for Creatives
When I first started my accounting firm I was given a piece of advice that to this day still sticks out in my mind - “don’t compare your beginning to someone else’s middle”. I believe this advice really resonated with me because I saw where my competitors were in their careers and competing with these well-established firms seems like an insurmountable task. Being an entrepreneur is a big undertaking, and running your own business is not for the faint of heart. Over the years I’ve successfully grown my firm to something that I’m incredibly proud of, but I’ll give you a piece of advice that I had to learn the hard way - it’s impossible to get everything right. When I first started out I thought any misstep would be detrimental to the success of my business. The more I worked with my clients and other experts in their fields, I began to realize that I wasn’t alone. Nobody has this entrepreneur thing all figured out, and no one expects them to. Business really started to pick up for me once I realized that I had the resources to help other entrepreneurs conquer their accounting fears. Helping others figure out one more piece of their business puzzle is what makes me happy to get up and get to work every morning. I’m excited to be sharing ten of my top accounting tips for you, the female entrepreneur.
5 Bookkeeping Tips and Tricks
Doing your own bookkeeping can be pretty tricky unless you have an accounting background or know someone who does, but that shouldn’t hold you back from trying to tackle this task, below are my 5 best bookkeeping tips. 1. Reconcile your accounts every month Think of reconciling like balancing a checkbook. You’re going line-by-line through the transaction detail to make sure what’s in your bookkeeping program matches up exactly with the bank statement. If it doesn’t, now is the time to figure out why. Sometimes transactions just don’t import and sometimes duplicate transactions will import (very common with PayPal). Most cloud bookkeeping programs (Xero, Quickbooks, Wave) have tools built in to make this a quick and easy process. If you’re using a program that doesn’t have a reconciliation tool, I suggest printing out your monthly bank statements for each account. Then, as you see the transaction or give it a category on the computer, mark it off your bank statement. Anything that appears in the bookkeeping program but not on your bank statement needs to be looked into and the same goes for the opposite. 2. Record payments to owners as an owner's draw If you’re a sole proprietor or single-member LLC, make sure you are categorizing payments to yourself as an owner's’ draw (this is not an expense). Note: if your business is an S-corporation, you will still report the wages paid to yourself through a salary as an expense. 3. Don’t double report your income I’ll explain this one with a personal example. I have a PayPal account and a checking account. Every so often, I transfer the balance of what’s in my PayPal account to my checking account. Most cloud accounting programs see that transfer the same as they see income. To their software, it looks like a deposit because the total cash increased. When I categorize these transfers in Quickbooks or Wave, I have to manually tell the program “hey, I took this money out of PayPal (so that balance needs to go down) and put it into my checking account (so that balance needs to go up).” 4. Save your receipts Whether something cost $1 or $1,000 you’ll need to save that receipt if you want to count it as a business deduction. You can keep digital copies of your receipts or paper copies and some people like to do both. Many bookkeeping programs are incorporating the ability to take a picture of a receipt with your phone and link it to the actual expense in the program. I’ve also heard from clients that love using Shoeboxed to save and organize their receipts. Whatever method you choose for organizing and saving your receipts, just make sure you can easily find what you need in case you’re ever to get audited. Plan to keep these receipts for seven years. 5. Do not use your business account for personal purchases This is super easy to do, especially if your business bank card looks a lot like your personal bank card. If you accidentally use the wrong card you can reimburse your business account for the purchase, or you can record the purchase as an “Owner’s Draw.” The biggest thing here is to not use your business card on a regular basis (or even if you can help it) to make personal purchases. Some people get in the mindset that it’s like paying themselves and it skips the step of having to make a transfer to their personal account. This is a slippery slope and can lead to messy bookkeeping and blurring the line between your personal assets and business assets.
5 Tax Tips and Tricks
There are so many deductions available to small businesses and it’s easy to overlook some of them. While you’re working on your taxes, keep these deductions in mind so you don’t miss out and overpay your tax. Here are my best tips for taxes, tips and tricks. 1. Track your mileage If you drive to client meetings, the airport for a business trip, or even the post office to mail out Etsy orders, you should be tracking your mileage. Since the mileage rate is $0.54/mile in 2016, this can add up to a pretty sweet deduction if you drive frequently for your business. Look for an app that you can have on your phone to track the miles for you. A popular mileage tracking app is MileIQ 2. Don’t forget about meetings If you grab a coffee or a meal with a client while discussing business, make sure you keep your receipt and jot down on the back a short description of your meeting. All of your Starbucks runs are not deductible though - the IRS says we can only deduct our coffee addiction if we’re meeting with a client to discuss business. If you just needed to get out of the office and are working at the local coffee shop, those drinks are a personal expense 3. Be a lifelong learner Online courses, in-person conferences, e-books, and physical books are all examples of education expenses that can be deducted. 4. Looking good is not expendable. If being fit is a part of your business, it might seem like common sense that you should be able to your gym membership. I’m not just talking about fitness professionals. Bloggers, models, and speakers may rationalize that they need to look a certain way in order to be successful with their business. Unfortunately, the IRS considers this a personal expense. 5. Don’t forget your home office If you have an area in your home that you use regularly and exclusively for business purposes, you can count those square feet as home office space. There are two options for deducting your home office on your taxes, which you can learn more about here. There are many more deductions available to small business owners, but these are the most commonly asked about. When trying to decide whether something is a business expense, think about whether it helped you to run your business or make your business better. These ten tips will help set you up for success when it comes to bookkeeping and taxes for your small business. As entrepreneurs, we will make mistakes – the most important thing is to learn and correct these mistakes so we can be successful moving forward. I wish you all the success when it comes to conquering the financial side of your business - don’t be afraid to ask for help from an expert when needed.