Finance advise for non-finance entrepreneurs.
Keep your business and personal finances separate.
To save time and avoid hassles at tax time:
- Differentiate between your different types of bank and credit card accounts.
- Deposit all your blogging, web writing, and freelance writing income into your business bank account. If you use your PayPal account for personal and business transactions, make sure the different types of operations are marked.
- Pay your business expenses with your business checking account or credit card.
Open a US dollar savings or checking account if you’re Canadian.
I live in Canada, yet most of my freelance writing and blogging income is in US dollars. So, I transfer my PayPal income (in US dollars) to my US dollar savings account and then transfer those funds to my Canadian checking account when the US dollar is high. The exchange rate can be a significant source of passive income for a starving writer like me!
Neatly file every invoice related to your business expenditures, proof of payment, etc.
When unsure whether you can write off particular service expenses against your income, you must keep the sales receipts when submitting your tax returns. And remember that every little thing you buy that supports or furthers your writing career – writing resources, time management software, bookkeeping for small business books, web hosting fees, etc. – is a potential write-off. Read Income Tax Tips for Freelance Writers for more info.
Learn what expenses are tax-deductible.
Writing off certain expenses will lower your net taxable income – but don’t wait until the night before your taxes are due to figure out what you can write off frantically! Keep your property tax, home maintenance, insurance, and utility bills because they’re probably tax-deductible. Keep your car mileage receipts, writing or blogging course earnings, restaurant bills, and library-acceptable receipts. You’d be surprised at how fast those tiny investments in your writing career add up to save you money at tax time!
Develop a system for organizing your paperwork.
Set up a tidy filing system, and keep your freelance writing or blogging invoices separate from your business expenses and tax write-offs. File your papers every week or month – don’t let them pile up! Keep everything related to your writing or blogging career, but keep everything organized in labeled files or binders. Also, enter your bookkeeping information in batches to save time.
Finance advise for non-finance entrepreneurs.
File your tax compliance reports on time. My simple accounting tips for small businesses get more complicated during this period! If your writing or blogging income is high enough, you’ll have to set a particular reporting period and pay different taxes, depending on your country, province, or state, to earn your income. It is where I jump ship! My future article will discuss this in more detail and explore several signs it’s time to hire an accountant or small bookkeeper.
Finance reporting.
Learn to know about cash flow, Budgeting, and the company’s financial performance, as any manager will have to see the principle of cash management, which is vital for decision-making in the future. A cash flow forecast is essential even before you start your business, as you have to know where the cash is coming from and how you spend it. The vital factor is weekly monitoring of cash flow helps the business.
Budgeting is crucial, so the manager must know what a budget is. How is that set up? And how to follow the budget at least every month in the organization? Then how will you know about the financial performance? It would be best to have proper financial reporting to assess the economic performance; otherwise, it is impossible. If you want to make changes or any development, it is crucial to have profit ratios calculated and analyzed to help decision-making.
Finance advise for non-finance entrepreneurs.
Then again, the managers will have to know about costs such as production costs, administrative costs, and overhead costs. These are all essential when considering a decision to advance the organization. These costings will help you determine the net profit when you make your calculations, which will help you know where the money has been overspent compared with the budget. If there is a negative difference between the budgeted and actual amounts, you should balance it with the funding to revise your expenditure pattern. Therefore, the manager must have a sound knowledge of finances and their implications to instruct your bookkeeper to do the work without errors. That will damage your entity sooner or later.