Are you a procrastinator? Maybe you’re overwhelmed and don’t know where to begin?
Let’s just say you shouldn’t wait until tax time to work on your business books. I strongly suggest you make it a weekly task on your calendar so it becomes a habit. Plus, you’ll be able to see reports about the financial health of your business. Let’s go over the 5 steps to update your business books weekly so it becomes a habit.
For many new RV entrepreneurs or even those who are experienced, the books feel overwhelming. Maybe you simply hate the numbers?
However, I’m here to tell you, you can keep your own business books. I encourage new owners to do this even if you’d prefer to outsource.
Dip your toes in and make sure you understand what’s going on before you hand them off to someone else. Otherwise, how will you trust that the books are being done correctly?
Honestly, I get why you might feel overwhelmed if you wait until tax time to work on your books. You’re doing so much catch-up and there’s a deadline looming. I could see myself throwing my own hands up in frustration.
Let’s alleviate that overwhelm and remove the struggle by taking it step-by-step.
If you do a little every week, it shouldn’t become a huge mess or be as overwhelming. Before I get into the steps, I want you to create a recurring meeting on your calendar. Call it work on the books, finance date, money talks, or whatever you’d like. Just make the time each week so you get it done. If it helps, brew a cup of your favorite coffee or tea, turn on some music, and set the mood to help you focus.
Now you’re ready to jump into the 5 steps to update your business books. You got this!
5 steps to update your business books
1. Record & Collect Your Sales
You’re in business to make money, right?
That means you need to get paid. Your first financial task is to record all revenue or income. This is the fun part! You get to see what you made that week for revenue. Woohoo!
Create and send any invoices and record all sales in your accounting software. This is also the time to check on unpaid invoices. If you use Quickbooks Online to send invoices, then it’s easy to send a little nudge for payments. Go to Sales: Invoices. For any outstanding invoices, click the drop-down menu to Send Reminder. Easy. Peazy.
If you use Quickbooks Online, it will tell you if your customer or client has viewed your invoice. This lets you adjust your message if you’d like.
If you don’t use Quickbooks to accept payments and send invoices, that’s ok. However, you still need to make sure all sales get recorded in your accounting system. You can check if there is an automated integration. This will let you skip any data entry. Otherwise, you may need to enter each sale. If you’d prefer, you could enter your weekly sales as one sales receipt making sure to record the full income and deduct the merchant services fee as an expense.
2. Log Your Expenses
Next, you’ll take care of the opposite of sales: the money you spend.
Maybe this is the not-so-fun part but it’s very important to know you aren’t spending beyond what you’re making. If you are, you need to review your business.
Take time to pay bills online, write any checks (does anyone still do this), renew any subscriptions, and do anything else important to running your business. Make sure to review all the money flowing out of your business to see if you disagree with any charges. You’ll want to contact the vendor right away. It’s never good to let that wait because keeping your vendors happy will help you serve your clients better.
Just like you made sure all your income showed on your books/accounting software, make sure all your expenses show up as well. You can input payments as expenses, checks, or bills to be paid.
Take extra care to make sure you record anything you paid for in cash! It gets extra hard to remember details as time passes. Can you remember what you bought last month? Exactly the point. If you do this weekly, you’ll actually remember what expenses you had.
3. Organize and Clear the Clutter
Now’s the time to clear out the clutter. If you live small, then you get the importance of removing clutter and extra stuff that’s not needed. I digitize documents every chance I get. That’s right. No need to keep paper. It takes up too much space and it’s simply not necessary. The IRS accepts digital copies!
Remember that every transaction should be substantiated (the IRS says so). This can be receipts, emails, invoices, statements, and the like. If you use Quickbooks or other accounting software, then you can attach the digital copy to the transaction. If you don’t want to do this, then make sure to have digital folders (backed up of course) to save all your weekly receipts. Label the folder accordingly and it will be easy to find a receipt or statement at a later date.
Many entrepreneurs skip this step because it’s mundane. Worse, it’s a lot of work if you don’t keep up with it. Do it in small pieces every week so you don’t generate a shoebox full of receipts. There’s no excuse because it’s easy with technology.
You can get documents into Quickbooks Online in several ways:
- Snap a picture or upload a photo in the app on your phone.
- Forward receipt emails to your account. Go to Banking: Receipts to set this up.
- Upload directly from Google Drive
- Download files and attach them directly to the transaction.
For the first three options, go into the Receipts tab of the Banking section. Quickbooks lets you match each receipt to the appropriate transaction. For the last option, you’ll have to open each transaction and scroll down to the bottom. You’ll upload the file to the “Attachments” box in the individual transaction. This last option is the most time-consuming unless you do it as you add each expense.
If you work on this step once a week, you’re creating an organized and permanent record. You’ll no longer have misplaced and unreadable receipts. Plus, if you ever get caught in an audit, you’ll be so thankful you were diligent enough to organize your receipts!
Now, for the best part – throw them away!! That’s right. Take that receipt and other papers right to the trash. Or archive the email. I think both have a satisfying feeling.
I’d say these days very few of you actually go to a bank. However, you might have to if you accept cash or if you simply enjoy the experience of a bank (does anyone actually enjoy a bank?).
Otherwise, most of you could deposit checks from your mobile phone unless the deposit is too large for an electronic deposit. It happens and I think that would be a good problem to have.
Make sure all your income is deposited into your business bank account. Don’t leave that check sitting around or it might get lost or get blown by the wind as you open your RV door.
This is also the time to make sure all your invoices are marked as paid in your accounting software. When you create a deposit in Quickbooks Online, you can check each invoice in that deposit. Simple, right?
I do recommend taking a photo of the check for your own records. Not all banks will do this for you so it’s important for your records. Remember step 3? Doing this will also help you know which clients paid and which ones still owe. You don’t want the embarrassment of following up with the wrong client, do you?
Whichever method you utilize (mobile deposit or a bank run), don’t skip this step. Make it fun and celebrate the income in whatever way you’d like. Pour yourself a glass of wine, dance to your favorite song, or simply rejoice as your business revenue increases. Celebrate that win!
5. Review the Bank Feed
If you’ve made it this far, then this step should be quick and easy.
In Quickbooks Online go to the Banking section and match, add or transfer each line item to the right account. If the bank feed is working properly, then every expense, transfer, and deposit should be in your bank feed.
As you work through the list, the majority of your transactions should match something you’ve already added. However, you may have missed something and this is a great opportunity to doublecheck amounts or correct anything you’ve missed.
You might even catch a bounced client payment via the bank feed. That’s what makes this so important. You might think something went fine but in reality, it didn’t.
If you have payments to a loan or a credit card, then record it as a transfer or credit card payment. Once you record it from the sending account, it should suggest a match in the credit card account.
Now pat yourself on the back or have a dance or a cup of wine! You’re done. Woohoo!
It’s so important to keep up with this. There are quite a few benefits.
First of all, you’ll actually know how your business is doing in real-time. You can use that information to make informed decisions about your business. Plus, you’ll hopefully overlook not sending an invoice, spending more than you’re making, and losing track of any cash spent in the business.
No more procrastination means no more hours and hours of frustration and headache when it’s finally time to review your financial data. Avoid the mistake many entrepreneurs make and do it the easy way.
Remember these steps to update your business books mean you’re committed to your business. It also shows you’re invested in building a profitable business. If you’re not aware of the finances, then how will you manage that?
In the beginning, I would schedule an hour to do this each week. If you finish early, you can move on to something else and be ahead of your day. Once you get comfortable with this could take as little as half an hour. It all depends on automation, the number of transactions, and your individual business.
Next up… block out time on your calendar for the end-of-month activities. I’ll cover that in the next article. Until then, mark your calendar and get cracking on your weekly bookkeeping. Remember to make it fun – sit outside, sip on your favorite tea, play music, meet up with an entrepreneur friend and do it together (accountability anyone?)
Once you’ve done it yourself for a while and understand the inner workings, you can outsource. I think you’ll feel pretty proud that you learned it in the first place and you’ll understand your outsourced talent better.
These steps to update your business books are here to help you be the boss of your business! That’s what we all want, right?!?!