Welcome to Lazy Owl’s newest article series, Creative Accounting, brought to you as a (hopefully) weekly feature as part of the Crafting a Business 101 series.
You may or may not know, but by day I am a *gasp*…accountant! A certified public accountant, or a CPA, to be exact. I’ve also been the owner/designer/bookkeeper for a little jewelry shop on Etsy called Lazy Owl Boutique since early 2011. So, I feel pretty okay about talking to you about basic accounting concepts, how they relate to your business, and most importantly, WHY they should matter to you.
To some people, “accounting” is considered a four-letter word, but as a small business owner, it’s important to have a grasp on financial concepts and bookkeeping skills. If you ignore your financial responsibilities it will eventually bite you in the proverbial butt! Don’t be intimidated by spreadsheets, numbers, paperwork, or formulas. It’s time to make your business work for you. If you take the time to sit down and educate yourself and then apply your new knowledge to your business, you will learn all sorts of things – how to save on your taxes, how to properly price your items, whether or not you are actually making a profit, how to increase your profit…the list goes on and on! Mastering your creative business’s finances will take you from crafting as a hobby to owning a bonafide small business.
Let’s ease into this. We’re never going to talk about anything super complex or confusing, so you can exhale now. And I promise you will learn some stuff that you can actually use to make your business run a little bit more smoothly.
I’d like to begin this series by talking about bookkeeping. Call it what you want – record-keeping, tracking expenses, saving receipts. Don’t let the funny term “bookkeeping” confuse you. I’m just talking about recording, in written or electronic form, your expenses (ALL your expenses) and your sales revenue. And I don’t mean stockpiling receipts in a shoebox (of which I may or may not be guilty).
All good finances begin with good bookkeeping. You cannot possibly get a clear picture of your business’s overall expenses, profit, or just plain ole financial success if you are not recording everything. Can you imagine Apple not knowing if they even made any money in 2012? That is basically what you are doing if you aren’t keeping track of these things.
Check it out – we just began a brand new year 2013! The slate of shoddy financial record keeping has officially been wiped clean for you. Do yourself and your business a favor and come up with a bookkeeping system now that you can use for your business all year. Whether it be a software program, like Quickbooks, an internet-based application like Outright.com, a simple spreadsheet, or even a special bookkeeping paper notebook and a trust calculator, you need to find a method that will do what you need AND that you will actually use right now. That means don’t pay out the wazoo for something with so many bells and whistles that you don’t understand how to enter a simple receipt. Start small if you need to and you can expand your system as needed. To me, the best method to begin with (and honestly the method I still use today) is a simple Excel spreadsheet. So if you’re short on funds or time, just open up a new spreadsheet and get started.
Now’s a fun time (if you are a nerd like myself at least) to ask other Etsy entrepreneurs and small business owners what sort of bookkeeping system they use. You’re creative, right? Think of your bookkeeping system as an extension of the creative “fun” of owning your own business. You can “design” your system to be a reflection of you and your brand. Want a color-coded spreadsheet with fun fonts? Go for it. Want a snazzy painted file cabinet system to sort your receipts and paperwork? Do whatever works to keep you motivated to consistently update your financial records.
Next week, we’ll talk about exactly what you should be recording in your new bookkeeping system. So start savings those receipts and I’ll see you then!
- Planning for Positivity in 2013 (lazyowlboutique.com)
- Crafting a Business Plan (lazyowlboutique.com)
- Outright.com blog for small businesses (outright.com)
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