How to Manage your Books Until You Can Afford to Hire a Pro

Starting up your own venture is an exciting time and can lead to daydreams of wild success and visions of what you want your life to look like when your business really starts to get off the ground.  Entrepreneurship can be very rewarding and being your own boss can be a true joy.

Although this is all true, it can also lead to late nights, weekends of work and major money stress.  Even though you have a great business plan and stick to it, you will need to deal with your finances sooner rather than later if you want to thrive and keep on that target to freedom.  

Ideally, you would hire the right professionals to help keep you in line, but when you’re starting on a shoestring budget, you need to do some of the dirty work yourself until your coffers are full enough to bring someone else in.  So what is a busy business owner to do? 

Below are my top tips and recommendations to keep your numbers organized so you can really see where you’re at and what you need to do to get where you want to be.

1. NEVER mix business and personal funds – even when you’re freshly starting out, sole proprietor or corporation, keep your bank and credit cards SEPARATE.  It’s a simple step that will really make your life and your accountant’s life at year end, MUCH better.  It’s also the hardest one for new business owners to get used to.  So START at the bank and work your way out from there. 
2. KEEP TRACK! You don’t HAVE to start with online accounting software – start with a spreadsheet tracking all your income on one sheet and all your expenses on another, listing what kind of expenses they are (i.e. – rent, office supplies, computer hardware, meals and entertainment, etc). 
3. KEEP ALL DOCUMENTS – you don’t NEED to have a giant shoebox or pile of papers, but you DO need a copy of all business-related expenses and income somewhere.  I would highly recommend taking a quick snap on your smartphone and saving it to a folder on your back up drive, or scanning to a back up drive.  Canadian governments accept digital files in the acceptable formats (such as PDF and JPEG), and they don’t get destroyed with coffee spills.  Also – keep a soft copy of every monthly statement you have for business accounts – credit cards, lines of credit, loan statements, bank accounts – you can compare what you have on record in your spreadsheet against these, to ensure you’re taking into account ALL your monthly expenses and income. You wouldn’t have a receipt for bank fees, interest spent or earned, so they are vital to keep.
4. Once a month, compare your income to your expenses to get an idea of how your profitability is looking. This is where you’ll be able to see if you have improvements to make in sales, or if you need to cut down on some spending, or if you can really afford that new computer you’ve been eyeing.  
5. CONSULT CRA WEBSITE – make sure the expenses you are claiming are legitimate business expenses! Vehicle as well as meals and entertainment expenses are often over-claimed.  If you’re not sure, consult with an accountant who can guide you.
6. Register for business accounts on provincial and federal revenue websites. Stay ahead of your obligations by having access to your online business accounts with the CRA and your provincial revenue agency.  It can take some time to get set up, but it’s well worth the effort.  

Once you’ve reached a point where you can afford to hire a pro, do your homework by preparing a list of what you need help with, as well as knowing what goals you have in the next 6-12 months for your business, so your bookkeeper can help advise you on how to get there.  Being aware of your business’s ins-and-outs financially will really help give you a solid foundation to work from and will make handing over the reins that much easier.  

Hewitson Bookkeeping can help put your mind at ease by tackling the day-to-day numbers for you. Learn more about the services we provide by clicking here.