It’s tax season, and that means that you’re probably looking at your accounting systems (or lack of them). Maybe you’re considering whether you should hire a book keeper (yes!) or work with an accountant (double yes!).
I thought it would be a good idea to share why I believe that accounting is sexy, and how you can get ready for your smoothest tax season yet. No crazy unexpected bills, and lots of time to plan for and make smart money decisions in your business.
Many creative people who get into business aren’t a fan of numbers… they may not track their income and expenses, which is dangerous because that’s like driving in the desert without knowing how much gas you have left.
The two most overlooked parts of a business are:
I talk about marketing a lot, but accounting is just as important.
Taking a look at why accounting is sexy
Marketing is all about how to get other people to know about your business, and accounting is all about knowing yourself and your business.
Taking a closer look at your business numbers can bring up a lot of resistance, because you’re not sure if you’re going to like what you see… but without looking, it’s really hard to know if you’re on track or if you’re going off a cliff.
There’s also the fear that you won’t do a perfect job in your tracking, but even if you’re missing some details – it’s still better to be looking at something when you’re making financial decisions, than driving blind.
How Accounting Is Sexy…
If you’re not comfortable looking at your money stuff, you’ll run into issues as your business progresses. Here are 5 key things that a basic accounting process can help you with in your business:
1. You can see how much money is going in and out of your business each month, so you can make investment decisions based on real data and not just a number in a bank account…
When you’re flush, it’s tempting to spend it. And when times are lean, it’s hard to keep going if you don’t know that there are payments coming in.
2. It gives you the confidence to do launches, upgrades, and hiring…
Growing your business generally means you’ll need to spend money, but growing too fast is a sure way to kill a business… because your cash-flow needs to be able to keep up with your growth.
When you’re confident that you can deliver on your business obligations, you can earmark a percentage to purchase software, hire a contractor or employee, and plan bigger launches.
3. If your business runs on a launch model where you’ve got money peaks and valleys, you can use historical data to decide which percentage of your income to re-invest.
No one can predict how well a new program will sell, so your best course of action is going to be small incremental steps that give you feedback before you go “all in” and invest a ton on a new project.
4. Another key to doing regular accounting, is that you can see how quickly you’re able to bring cash into your business… From the point of sale, to receiving payments.
If you’re in a service business, you might realize that there’s a lot of time between when you book the business and deliver on a project, and that can cause financial stress on your business if you need to pay other people.
Knowing the numbers helps you figure out if you need to change your payment terms or ask your clients to pay upfront.
5. Finally, when you have a strong grasp on your business finances, you can confidently pay yourself.
In the early days of a business, it doesn’t make much sense to pay yourself because the income is still building and you’ll want to re-invest. But even starting with a small salary, you’ll get better at budgeting and making smart business choices.
I’ve got a comprehensive program all about money and accounting in the Heartquarters Insider membership – and we’d love to have you join us if this is something you know you need to explore more.
Now, I want to hear from you
Do you think accounting is sexy? Do you wish you could look at your numbers more objectively? Leave a comment below and let us know!