By - Shiv Patel
As a small business owner, you probably ask yourself questions such as, where am I spending my money? Or, do I have enough money for the month?
Keeping up with your books can feel overwhelming and BORING. You tell yourself every day that you will get to those piles of receipts, but the days seem to fly by. Soon tax season comes around and you cram to get your data into an accounting software to get up to speed. I know what that feels like. I have seen it and I have been there myself.
Do this quick exercise at the beginning of each month:
· Open Microsoft Excel
· Follow the below format:
Ending bank balance from previous month= beginning bank balance for this month
+ (add) the total amount of cash you expect to bring in for the month (take an estimate)
- (minus) the total amount of expenses (take an estimate)
= Ending balance for this month
In our example, we estimated $1,800 dollars left to spend at the end of the month. While you still have to store all of your expenses and revenue at a detailed level in an accounting software, you now have a high level overview of how much money you have to spend to determine what you seriously need and do not need. This will start you off on the right track for business success.
Here are a few additional helpful tips about keeping up with your books:
1. Stay Organized: Take pictures of your paper receipts and store them in a folder on your computer.
2. Save Time: Look for automation software that will help you with your books. There are inexpensive ways to store your data so that you can spend your valuable time focusing on your business.
3. Save Money: Understand the nature of your expenses. While you know how your business works, you should know how to break down your costs into categories (i.e material, machines, subscriptions, etc.). This will help you gauge your monthly expenses.
Shiv Patel is the CEO & Co-Founder of Cratosys