How to Make Sure Your Books Are Set Up Right
Owning a small business is no easy feat. I know you’ve already got a lot on your plate, and determining how to make sure your books are set up right may not be high on that list – but it should be.
You wouldn’t go all the way out to a shoot and knowingly leave your camera behind, would you? Just like it is imperative you have your equipment to be a photographer, the same goes for your books when running a photography business.
Before you go buying QuickBooks Online or perusing the myriad of bookkeeping programs available to you, let’s go over some important steps that will help you figure out how to make sure your books are set up right.
Separating Expenses
I can’t stress enough how important it is to separate your personal and business accounts. First and foremost, doing this will provide you with liability protection. If that isn’t enough to get you in your car and speed to your bank, losing out on tax deductions sure will.
If you’re not separating your expenses, certain tax deductions can get lost in the mix. That means you’re going to be missing out on money you’re owed come tax time, and NOBODY wants that!
Choose an Accounting Method
You have two accounting methods to choose from for your small business: Cash or Accrual. This will determine how your small business tracks its income and expenses.
With cash accounting, you only record your income once money has exchanged hands, and it is safely in your account. This method is choice among many small businesses because of its ease to maintain, and gives you direct insight into how much cash is available at any given point.
With Accrual accounting, you will record your income when it is billed, whether you received payment or not. This method can provide you with a better overall understanding of the long-term view of your financials.
Categorizing and Organizing
When figuring out how to make sure your books are set up right, it is SUPER important to make sure all your transactions are categorized. Being a photographer, you already know how important packing and organizing your camera bag is, so you should be a pro at this already!
Keeping detailed recordings of each transaction is going to save you a massive amount of time and quite a few headaches at tax time. Doing so will also get you the most out of your deductions come tax time, and make your life way less stressful if you’re ever audited.
If you’re determined to do your own bookkeeping for your small business, using a program like Quickbooks Online will benefit you greatly in these tasks, but consider reaching out to your accountant to better understand the ins and outs of your specific small business.
Choosing the Right Tools
As a photographer, you already know how important it is to choose the right tools. From editing programs to camera lenses, you’ve got this down to a science. Choosing the right accounting tools is just as important in determining how to make sure your books are set up right.
These days, there are plenty of options when choosing how you’d like to keep your books healthy and happy. Using Excel Spreadsheets may be a good option when just starting out, but as your business grows, so will those spreadsheets, and they may become too long and arduous to maintain.
My go to bookkeeping program is Quickbooks Online, which provides you with a wide array of tools at your disposal, like invoicing, managing payroll, managing payments, etc. Although Quickbooks Online can be a vital resource when doing your own bookkeeping, it is just as vital to know how to use it properly. I can help with that! Click here to learn more.
Make Bookkeeping a Habit
This! Next to separating your business and personal account, this right here is one of the most important things you’ll need to do when learning how to make sure your books are set up right.
I feel like every small business owner has been there – you procrastinated doing your taxes and filing day is lurking right around the corner. Now on top of being a photographer, you need to be the lead investigator of receipts and transactions. It doesn’t have to be this way!
Whether you’re choosing the DIY bookkeeping route, or outsourcing to a professional, setting time aside each week, month, or quarter for bookkeeping is guaranteed to keep your business on the track to success.
Closing
You’ve got a lot of jobs already: photographer, creative genius, marketing master, client confidant… You don’t have to add full-time DIY bookkeeper and Quickbooks Online aficionado to the list - and for your financials sake, you shouldn’t!
Although this article gives you a basic understanding of how to make sure your books are set up right, there are so many nuanced things to know about accounting that can’t be learned in one, or even 100 articles.
