January 20, 2010
let’s talk finances! tax season is just around the corner, so i thought it time to start easing into to the money mindset. we’ll start simple though, don’t worry!
this article about business growth by amandadailyworth outlines the reasons why you should carefully separate you personal finances from you business finances. as i did, i’m sure many of you started your etsy shop as a hobby, as a way to ‘get your toes’ wet and see how things went. however, soon the sales start rolling in and you are now in need of a website, business cards, more supplies, and maybe you’re even some advertising around the web.
a simple, free and very important step to take is to open your own business bank account. this way, you won’t be dealing with a tangled account of not really knowing what money is going where, let alone where it came from. when it comes to tax season, it can take days to filter through one account, trying to separate it into your personal and business expenses.
sharing one account for your personal and business expenses will not only make taxes difficult, but will also make proving your income difficult. when you’re revenue goes into the family account and your using a personal credit card for your business expenses, you can see how quickly confusing it can get. and, if you’re planning on buying a new home or getting a loan from your bank- it is essential to be able to prove your income.
you should know that it’s time to open a separate account when you start to loose track of how much money is going in or out. when your budgeting gets overwhelming and you start to loose track of your receivables. you need to run reports to see your expenses vs. your income but you can’t because the data is all mixed together. before you get to this very frustrating and time consuming point- consider opening your own account.
ready to get started? first visit your bank and open a free business checking account. get a separate credit or debit card to use for only business-related expenses. and, i think it’s a good idea to keep your paypal account separate as well. if you don’t know how to do the bookkeeping yourself, consider hiring an accountant to manage it. having monthly profit-&-loss statements at your fingertips is invaluable. the first step in having a successful shop is understanding your finances and which areas are performing well.
speaking of finances, daily worth is a free daily personal finance email for women. they deliver practical tips, empowering ideas and the occasional kick in the pants! you can sign up here, and also peruse their website for a number of great articles regarding finance.
have you ever noticed that you can download your sales data, right from etsy? go to ‘your etsy’ then ‘sold (orders)’ then scroll down to the bottom to find where you can easily download all of your sales data to help ease the task of managing your finances.
finally, have you heard of mint.com? it’s a free website to help you manage your money. you can divide all of your expenses into categories, budget your money, find savings, and start to understand your finances better.
what is your advice? do you have any tricks or suggestions on how to better manage your finances? please share with us in the comment section!