Bookkeeping involves calculation, and calculation is something that creatives do not like to identify with. However, it is an important part of any business that wants financial success.
Mathematics or accounting might not have been your favorite subject in high school and you would probably prefer employing someone to do all the ‘hard’ work, but, what happens before your business grows to the point where you can afford it? Your guess is as good as mine; you have to do it yourself.
No matter how you look at it, if you do not want to spend your profit, make losses, or get into financial trouble with tax institutions, you have to know the basics of bookkeeping. So you might as well learn about it and help your fashion startup stay afloat.
Keep your receipts
To keep tabs on your documents and to make it easier to refer to transactions, Kim’s first tip is to keep receipts and arrange them according to the dates the expenses were made. For her, she arranged the receipts according to the quarters of the year and the months within each quarter.
You can come up with a different system that works for you, but the important thing to note is that your receipts (online or offline) are important.
For the online receipts, they can be kept in a folder on your computer, but for security purposes, it is better to save your documents in the cloud. Dropbox is usually a good tool for that.
Record your sales
It is important to record your sales and all the extra details that come with it. You can record details like, the name of the client, the country or location, the number of goods purchased, the price and so on. Recording these details will help you arrive at certain conclusion that can help you make decisions for your business.
A good example is how Kim was able to decipher that her goods are more sought after during summer than during winter and she was able to introduce measures to boost sales during the “downtimes”. She was even able to tell who her loyal customers were. You can have a book or note pad where you record sales with a table that has rows for all the details.
Record your Income and expenses periodically
This is where the calculation comes in and most likely your least favorite segment, but definitely the most important. It is easy, there are many accounting apps that can help you do the job of recording your sales and expenses, but you can also use an excel sheet to do this.
It is not such a ‘biggie’ as you can make use of calculators or even let your excel sheet do the calculation for you with the right formula. Recording income and expenses makes it easy to track your profit, pay your salaries, and keep your taxes and loan payments to avoid spending money you don’t have and landing in the ‘deep dark pit’ of debt.
This way you know if your business is doing good and what measures you need to take to make it better.
Identify your streams of income
Know the different good you sell, and or services you render that serve as your sources of income. After identifying them, record your expenses and income per stream. This will help you know how much you are making from each and will help you know which stream to focus on, do less of or even terminate.
Bookkeeping is a proactive measure and a lot of harwork, but it is necessary hard work to keep you from piling up unnecessary work that gets tougher when it can be avoided.
With bookkeeping, your head is clearer, your mind is alert and you can tell where your business is going.