As solopreneurs, we often hear about having too many hats to wear. Well, one hat we must all wear is the financial one. Since we are moving into tax season, we are being forced to take care of our financial work so that we can get those returns in on time. Many of us dislike this work and so don’t pay much attention the rest of the year. This is a good time to have a look at our financial systems and stream line.
I’ve attended a couple of networking sessions this month that focused on keeping the taxman happy. Here I will present some ideas to keep the solopreneur happy – the better organized we can be, the less painful year end will become.
Streamline Your Financial Systems
– You will have a lot less confusion and expense at the end of the year when you have a business bank account and a credit card for business purposes only. Keep them separate from your personal accounts. Set yourself up for on-line banking so that you can take care of business at any time of day or night. Track your use of bank cards using a phone app such as Checkbook Genius.
– When you are out and about, take the time to take a snap shot of receipts with your phone (use Evernote
for this) Be sure to write notes on the receipt before snapping. e.g. the name of the person you are lunching with and the purpose of your meeting. Later, back at your desk you can move these receipts to a financial filing system. I use a little program that’s been around for a while called Organize My Electronic Filing Cabinet for Dummies
It sets up folders especially designed for financial filing. You can also file all those receipts that come in by e-mail and those that you have scanned. Everything in one place. These steps allow you to become a paperless business; no more need to mess around with the proverbial shoe box.
Mileage and travel expense
– In Canada, the taxman insists on seeing your mileage log if you are claiming car expenses in your business. The Android app Cashbook Expense Tracker
will use your GPS to track mileage and record it so that at year end it can be downloaded as a spreadsheet. No more messing with missing pens and notebooks.
Paying Bills – Request the electronic version of all your bills and save them to your financial filing system. Then devote one day per month to get the bills paid and save receipts.to the same system. Be sure to pay credit cards on time and pay down each month. If you have a slow month, pay down the credit card with a line of credit that has a very low interest rate. Pay Line of credit on time as well.
Invoicing – Never let this pile up! Know that some companies will wait 30 days before paying. There are several ways to invoice on line. Pay Pal, Free Books, Quick Books all allow for electronic invoicing. For follow up, keep those invoices that are awaiting payment in one place and with dates.
Auto Payments – Now that we have so much commerce on line, the number of those auto charges can creep up. Be sure to keep a list of them with detailed information – name of the company, name of the product, payment plan – (monthly, annual, etc.) and price. When the app is no longer in use, it will be easy to go in and cancel when you have the information at your fingertips.
Bookkeeping – Whether you do it yourself or have someone else do it for you, be sure to take care of this on a quarterly basis as a minimum. Run reports so that you can check the health of your business. Learn to understand financial statements. Run a a cash flow report to ensure that you can take care of all upcoming expenses. When things get tight, know which expenses are fixed and which are variable so that corrective action can be taken.
Tax Filing and Reports – It’s a great idea to have a bookkeeper on your team if you can afford it. But if you plan on doing most of the work yourself, be sure to have an accountant review before filing. These professionals spend a great deal of time staying on top of all the latest taxman directives.
Mindset Monday Question: What system tricks and shortcuts do you use?