If you’re DIYing your business bookkeeping, you might be missing some important line items. Not tracking things like your taxes, expenses and income could result in more paperwork (and a larger tax bill) come tax time.
Let’s take a look at some of the most vital pieces of your business to track–and why you need this in place before you make any big business decisions.
Income
Obviously you need to know how much you’re bringing in each month, but there are other facets of your income to keep tabs on too. Where is that income coming from? Track the part of your business that’s bringing in the dollars and which specific product or service is doing the best. If your business thrives on referrals, you’ll also want to know who is sending you the most work–not only so you can thank them, but also so you can continue to nurture that relationship.
Expenses
Do you know exactly how much is coming out of your account each month to pay for things like your email provider, internet and any contractors you have working for you? What about those pesky subscriptions that you might have forgotten about? Having a good handle on your expenses is vital for ensuring you’re bringing in enough income to pay for all the overhead in your business.
Cashflow
Your cashflow is the combination of your income and expenses, and it will tell you if you can afford to hire a new team member or take time off or invest in that training program you’ve had your eye on. When you track your cashflow, you’ll also know when you should expect payment from specific retainer clients and when your bills are coming due–so you’ll know exactly how much you should have in your account at any given time during the month. This is vital information to have when unexpected expenses pop up (and they will!).
Taxes
Are you saving for your year-end tax bill? If not, you’re in for a rude awakening come tax time. Know how much you paid in previous years and what you should be saving for this tax year–and then set it aside. Better yet, make estimated quarterly taxes so you’re not hit with a big bill. (And check with your accountant, because chances are that the IRS is already expecting you to do this.)
Are you missing one or more of these vital pieces in your monthly tracking forms? It’s time to get on top of it now, for the health of your business.
