How To Save Money, Increase Profit, Gain Back Time, And Alleviate Stress Using 4 Simple Bookkeeping Strategies. Using 4 Simple Bookkeeping Strategies

Transcription

1 How To Save Money, Increase Profit, Gain Back Time, And Alleviate Stress Using 4 Simple Bookkeeping Strategies Using 4 Simple Bookkeeping Strategies 1

2 Copyright 2017 by Bastion Bookkeeping. All Rights Reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of Bastion Bookkeeping. 2

3 TABLE OF CONTENTS ABOUT THE AUTHOR... 4 INTRODUCTION... 5 ACCOUNTING SOFTWARE... 6 BUDGETING & BENCHMARKING... 8 TRACKING FOR TAX DEDUCTIONS & CREDITS 11 ACCOUNTABILITY A LIL EXTRA SOMETHING CONCLUSION A SPECIAL THANKS

4 ABOUT THE AUTHOR Megan Goodall is the Founder, CEO & Lead Bookkeeper of Bastion Bookkeeping, a firm driven to create change in how business finances are managed. Bastion Bookkeeping was created after Megan and her husband crushed over $60,000 in debt in one year. Megan found a new passion in the world of finances after experiencing the contrast between stressful finance management and peaceful profitability. With extensive applied analysis and bookkeeping training, she now works alongside micro businesses to solve their financial struggles and bring about financial peace through the use of bookkeeping. 4

5 INTRODUCTION I know what you are thinking; the title of this book sounds too good to be true. It is true, and for a little part, it isn t. The bad news is to: save money, increase profit, gain back time, and alleviate stress, you have to put in the time and effort. The good news is that these strategies are simple. I know that once you implement this book with a system that works best for your business, you will see results necessary for business success and your sanity. Success is a fundamental drive for every business whether big or small. This means business owners have a shared desire to see an increase in profits and save money. Although there may be other motives or reasons, the first thing any successful business person will think of is their profit margin. The big obstacle I see business owners face is the dreaded time and stress of business ownership. Every business owner s (even non-business owners) desire is to gain back time and reduce stress. In this short, simple book, you will discover how you can do just that by putting some simple bookkeeping strategies in place. These four strategies are ageless but are often overlooked techniques. With considerable expertise, each approach has been thoroughly dealt with not just to engage the professional but to ensure that even with a zero background in accounting or finance management, your business enjoys the best. Let s begin, shall we? 5

6 ACCOUNTING SOFTWARE When it comes to managing your books, there are many ways to keep track of your transactions. None is as efficient and accurate as using an accounting software. There is a variety of accounting software to choose from, so how do you know which one to use? When choosing a platform, make sure it is cloud-based. Having it cloud-based diminishes the risk of losing data. You know where it is, that it is secure, and you can access your finances at any time. Using a good accounting software allows you to know your debits and credits instantly, to reconcile bank accounts, and to create a variety of financial reports. If you hold inventory, then a good platform offers basic inventory tracking. An even better platform integrates with specialized inventory tracking software that allows you to closely monitor your product flow. Tracking inventory efficiently ensures that product is not going to waste by having too much inventory or underselling your clients by not having enough products. Additionally, it is beneficial to know the inflow and outflow of your goods so you can predict potential future demand and trends. Having an insight into demand trends allows you to plan accordingly with appropriate inventory, marketing, and services. If you are an invoice driven business, no worries, accounting software has you covered. Good software allows you to take control of your invoicing and get rid of the guessing game. A good cloud based platform allows you to know in an instant who owes you money and how much. You can also create professional invoices tailored to your business to send to your customers. Although using a good accounting platform can make your life easier by creating an efficient system, it can still be time-consuming especially is you are keen on ensuring accuracy, fully understanding your cash flow, and desire to have tax ready books. One way to beat this is to outsource to an expert. 6

7 How are you saving money using an accounting platform? If done properly you can accurately track all your debits and credits, and this allows you to know where to cut back and where you have wiggle room. You can know cash flow by running important financial reports, which provides you with the information you need. Through invoicing you know who owes you money so you can make sure to collect missing funds. Lastly, it allows you to draw up important documents for your tax person or CPA. This can save you money as your CPA does not have to do extra work like spending time correcting books, going through excel sheets, or figuring out a year s worth of finances. How will this increase profit? Having an updated look at your cash flow along with a categorized look at debit and credits all allow you to see when expenses need to be cut. Having access to financial reports that give clear insight into your business's financial health allows you to make strategic business decisions such as creative marketing strategies that save money but bring great return on investment (ROI). How will this help you gain back time? Cloud based accounting software automates accounting by syncing with bank accounts and other platforms such as: Hubdoc, Bill.com, Shopify, TSheets, and many others. You no longer have to manually input your transactions into Excel or maintain hard documents/receipts unless your business specifically requires it (see your CPA). All of your transactions sync up instantly, and all of your receipts/printed invoices/, etc. can be scanned/photographed and uploaded to a platform that extracts the information then syncs up with your account. How will this alleviate stress? Take some rest in the fact that you have one less thing to do. If everything is done properly, there will be no need to manually enter in transactions, which can save you loads of time. Not having to take additional time to file away receipts, printed invoices, or hard documents (again please see your CPA) can save you another chunk of time that you can spend focusing on sales, marketing, product design, blog outline, or customer connections. 7

8 BUDGETING & BENCHMARKING Let s talk the dirty 'B' word, budget. Budget tends to ring negative and unpleasant in many people s ears. If you do not have a budget, you will not know what you can spend without hindering your business finances. No budget means free spending and over-spending or underspending. Budgeting is a wonderful thing and when done properly helps keep your business in momentum with purpose and confidence. So how do you go about creating a budget? First set reasonable and achievable goals (something to work toward). Make small goals that lead up to big goals such as pay off a business credit card, increase sales by 20%, or obtain two new accounts each month. Be creative, the point is to create a goal you will stick to, something you are sold out to and motivated to achieve. This will help you stick to your budget. To keep your budget on track and in good order, make sure you are categorizing transactions. The nice thing about using good cloud based software is that it will automatically categorize common transactions into an already existing category. This is updated into your budget so you know what you have left. When budgeting, here are some recommended tips: put money aside to pay yourself, for profit dividends, to pay for taxes, to cover payroll, for an emergency, then create a budgeting plan for expenses (make sure to make a special plan for major expenses) such as marketing, vendors, needed platforms (accounting, inventory management, etc.), rent, internet, etc. Cut back on expenses that are not necessary for operation and are not producing a return on interest (ROI). A simple example of how to evaluate this is if you are doing a paid marketing campaign that it is not generating new leads or customers, cut it off. Or if you are paying for a service that is not critical to keeping you up and running, such as a magazine subscription to your industry then let it go. 8

9 Make sure you stick to your budget. Breaking your budget only hinders you and your business. Not sticking to your budget also increases stress and sets you back. Let s talk benchmarking. Concisely put, benchmarking is comparing your industry s processes, programs, offerings, products, pricing, etc. with that of others in the same industry. This can help you evaluate whether or not you are providing the basics that everyone else in your industry provides. It also allows you to think creatively about a stand-out offering that provides another revenue avenue that others in your industry do not offer. Lastly, it allows you to evaluate whether you are charging the right value for your services or products. As a note, know that your price point alters the type of customer you draw in. How does this save money? Budgeting helps you know how much to spend and where. Not having a budget brings a temptation to splurge on unnecessary costs. Budgeting also helps you reevaluate your expenses, encouraging you to cut out unnecessary expenses thus saving you money. How does this increase profit? Saving always increases profit. Budgeting helps you save properly. Additionally, many entrepreneurial business owners do not pay themselves until after all expenses are paid. With a budget in place, try paying yourself first. Behaviorally, this will increase personal motivation that will go back into creatively increasing customer connections and sales, and ultimately increase your personal profit. The momentum of finally getting paid by your business will result in stamina that leads to new sales, creative revenue ideas, and a renewed passion to sign on clients thus increasing your business's profitability. How does this gain back time? At first, creating a budget can seem time consuming and daunting. You could ask for help from a trusted outsourced bookkeeper that provides budgeting services, or you can set time aside to create your own budget. Either way, once it is created all you will need to do is ensure that all transactions have 9

10 been categorized properly and review the budget before making a purchase. In the long run, this will save you loads of time from both fixing mistakes or having to work harder/more to recoup costs from overspending or leveraging the business. How does this alleviate stress? Talk about a stress reliever! Knowing how much money you have to spend without questioning whether or not it is in the bank allows you to feel in control and confident in your purchases. 10

11 TRACKING FOR TAX DEDUCTIONS & CREDITS Talk to your accountant or bookkeeper to make sure you know everything you can deduct and what the requirements are for documentation. Some professions can use education expenses, mileage, charitable contributions, etc. as deductions. If you know what can be deducted in your business, then you can track it properly in your account. In your accounting software ensure you are categorizing properly. This way, it will be easy to pull up for reference. It s worth mentioning that not categorizing expenses poses risks that affect your budget, your cash flow, and potentially taxes. The most common type of tax benefit comes in the form of tax deductions and credits. Claiming a tax deduction reduces the amount of your income that is subject to tax. The amount you are able to claim is exactly the amount that is reduced in your taxable income. Claiming a tax credit gives a dollar for dollar reduction in your taxes. Tax credits tend to be related to energy efficiency, children, and education. Please see a tax representative for further information. How does this save you money? The biggest benefit is when taxes come due. Tracking your expenses for deductions, donations, and possible credits can offer tax benefits that save you money. Tax credits can save dollar for dollar, meaning that a tax credit of $1,000 saves you $1,000. On the other hand, tax deductions lower your taxable income and are equal to your tax bracket, meaning that if you are in the 25% tax bracket with a $1,000 deduction, this will save you $250 in tax. How does this increase profit? Think back on how we already allocated money toward taxes by setting up a good budgeting process. Doing this, we now are not only saving money at tax time but we are also not scrambling to come up with money for taxes owed. You can keep momentum in creating sales, connecting with clients, and continued business operations without having to work overtime to make up for tax costs. How does this gain time back? Not tracking expenses, donations, or credits means at some point you will have to catch up. This can take loads of time. Doing it immediately will only take a few 11

12 seconds to a few minutes, allowing you to focus on your customers and sales. How does this alleviate stress? Tax time is overwhelming and you will likely walk into your CPA s office missing out on deductions that could have saved you money. Taxes are stressful enough, going to your tax appointment confident with up to date tax ready books that have all your deductions accounted for will make Tax time smoother. You can be the one that is mellow on tax day, holding a glass of wine relaxing by the pool. 12

13 ACCOUNTABILITY It's important to have accountability. Mentors or business coaches provide business owners like you with: support, encouragement, fresh strategies, and accountability to overcome personal struggles that hinder business growth. In the same way, having financial accountability provides you with essential support and fresh strategies that can lead to increased profits and growth. One way to establish this accountability is to meet with your Accountant twice a year and your Bookkeeper monthly. Hiring a CPA is critical, as he or she will help you with tax needs or questions. Having a bookkeeper apart from a CPA, can save your CPA time and in turn save you money. A bookkeeper knows your business finances intimately, and can help you understand things such as: accounting software, financial reports, your cash flow projections, budgets, benchmarking, inventory fluctuations, and so much more. When looking for the right bookkeeper, it s important that he or she is a continuous learner, knows your industry, asks questions, communicates well, is passionate about your vision, and acts as a trusted financial advisor and not just a data entry specialist. How does this save you money? Certified Public Accountants have a lot of work on their plate and are worth a lot of money (an average scale of $60-$250 per hour). Asking him or her to complete your books will typically cost you a lot more than outsourcing to a bookkeeper. You can be assured that your bookkeeper and CPA s working relationship has you in good financial order without putting out the extra cost. How does this increase profit? Having money freed up to put toward compensating yourself or back into your business always brings about additional revenue when done properly. How does this gain back time? Although you will be meeting with your CPA and bookkeeper, you will not be completing your books or scrambling to catch up come tax time. You can put your time into something more effective for your business. How does this alleviate stress? A good CPA and bookkeeper are willing to work together. With this, you can be assured that your books are being done with accuracy and efficiency. You can be rest 13

14 assured that your financial team consisting of you (the business owner), your bookkeeper, and your accountant are all working together and agree with your financial records. 14

15 A LIL EXTRA SOMETHING Let s talk about how to leverage bookkeeping for your business. In order to fully use smart bookkeeping to: save money, increase profit, gain back time, and alleviate stress, you need to make sure you have all the information you need. Having complete information allows you to plan and make smart business decisions. One of my favorite things about bookkeeping is that when done properly, you can gather customized information that allows you to evaluate past data against current data and even project possible future outcomes. Does this mean bookkeeping can predict your cash flow future? Well, yes and no. It doesn't predict what exactly will happen, but rather what most likely will occur based on historical data information. This is a beautiful process called financial analysis. Having accurate books that are meticulously cared for and intimately understood by a professional can help you evaluate this. This will allow you to make better business decisions so you can optimize customer satisfaction, increase sales, and strategize new creative marketing plans for down times. 15

16 CONCLUSION In review, the best choice of accounting software is one that is cloud-based to safeguard and optimize systems. If you are tracking complex inventory, then make sure the platform you choose integrates with specialized inventory tracking software that allows you to monitor product flow carefully. Additionally, good accounting software provides more control on invoicing and eliminates the guessing on who owes you and how much. Budgeting and benchmarking are efficient tools in curbing over-spending and under-spending all the while bringing greater value to your services. While preparing budgets may seem time-consuming and overwhelming in the short run, it is quite the opposite in the long-run. The key to getting the best of this approach is making short, realistic goals that will culminate into the achievement of broad financial objectives. Tax deductions and credits ensure that you are prepared for and get the most out of tax time. What a huge way to relieve yourself of a headache while saving some money. Now, it is evident that you can save money, make a profit, and save time at absolutely no stress. Even though there is no one- shoe-fits-all technique, the correct utilization of the four methods discussed will undoubtedly give the best result. While these strategies will help you manage your finances better, it does not mean that you should have to do it all on yourself. Absolutely not, that is why there are specialized individuals, like myself, to help you every step of the way; it is what accountability entails. Now you can see how using 16

17 a few simple strategies can benefit your business immensely. 17

18 A SPECIAL THANKS Dear Business Owner, As a business owner myself, I know the demands we face every day. I am honored that you have taken the time out of your busy schedule to read how a few bookkeeping strategies can benefit your business immensely. I wholeheartedly believe that the root of every business is its finances. The choices you make today will determine the success or failure of your business tomorrow. I am so thrilled to be a part of helping you make great financial decisions that create growth in your business dream. I welcome you to reach out with any questions at any time. Bastionbookkeeping.com/contact Want no stress finances? Join an exclusive group: Sincerely Yours, Megan Goodall Founder & Lead Bookkeeper 18

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