Posted by in indie biz

etsy shop help

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!

singing in the rain umbrella

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.

doll parts print

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.

happy bunny

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.

kitchen aid mixer felt coasters

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.

two hundred two – hand sewn silk mobile

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.

1950 barra randonneur bike print

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.

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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.

lambswool elephant – eco friendly

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!

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8 comments

comments

  • I really enjoy and appreciate this column! It helps me to stay focused on the business aspects of creating… I’d also really recommend “The Boss of You,” by Bacon and Mears, and “Craft Inc.” by Mateo Ilasco. Both offer great financial advice specifically for female entrepreneurs.

    Thanks for the weekly inspiration, Bonnie!

  • what an amazing post! thanks so much for all the great info!

    xo
    Lana
    http://www.joeyandlana.com

  • I make a point to enter all my receipts and sales into a cash flow spread sheet pretty much as they happen, at least on a weekly basis. I categorize the expense or income on that spreadsheet, and although it’s not a P&L, keeping an eye on the bottom line through the year really floats my boat!

  • Great post! My business {shoes} started out as an Etsy shop, and now I am working with two different manufacturers. I would agree–having an accurate account of finances/profit margins are a must, esp to afford business growth. The only thing I would add is that you must have a DBA to open a busness account. So, if you haven’t filed one, make sure you do so before you stop by the bank :)

  • So smart and so valuable. Thank you for this!

  • @stephanie: thank you so much for the good reads! i’m going to put them on my list now. :)

    @jessica: thank you for that info! good to know and we appreciate the advice!

  • Really informative & helpful article! Thanks & good work!

  • FYI: I started with mint.com, but ended up switching over to wesabe.com because mint had trouble uploading my accounts and never fixed it. Both useful tools, providing they work correctly.

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