Did Anyone Tell You This When You Started Your Business?
Actionable Accounting Tips That Empower Female Entrepreneurs
by Jessica Elliott
November 6, 2019 .4 min read
Do you ever find yourself so caught up in your day-to-day life that you forget to send out an invoice? Perhaps you're scrambling to separate personal and business receipts as the year ends? The fact is that many of us are juggling various forms of caregiving duties, possibly a full-time job, then running a business on the side. The emotional stress from financial uncertainty is a heavy burden that affects our lives.
If you've let your accounting slide, then undoubtedly you're feeling a massive amount of stress and pressure from the fear of the unknown. With a few steps, you can develop a system that saves you time and reduces your stress level. In return, you'll have the right processes in place to grow your company.
Track Expenses Year Round
Before you can even open a business account, you will need to register your business with your state. If your business is registered as an LLC, partnership or corporation then you must maintain a separate bank account for business purposes. Check with the bank you are looking to do business with to see what documents they will need to open a business account. It will vary between banks.
When opening up an account, consider opening both a checking and a savings account. The savings account can be useful for separating monies that are earmarked for taxes (ex: self-employment tax withholding).
Ideally, you use a separate checking account and credit card for business purposes.
But this isn't feasible for everyone. My first go at it resulted in a feeling of failure. I didn't have enough money to keep separate accounts open, and it added too much hassle to my life.
However, you're paying 15.5% of your net earnings to the self-employment tax. Every misplaced receipt could reduce your overall tax burden. Here's what you can do:
Keep your business purchases separate.
If you buy a new package of pens while grocery shopping, then complete the purchase in a second transaction, which gives you a separate receipt for your business-related items.
Choose one or two designated spots for your receipts.
Preferably, you scan every receipt and place it neatly in its file folder. Time-strapped business owners don't always have that luxury. Instead, go with the easiest route. For example, keep an email folder with all emailed receipts. Then, choose a spot where you naturally shove receipts, like your glovebox and a basket on the counter. Set a reminder once a month to retrieve, document, and file everything.
Track business use of shared devices.
You can claim a portion of your cell phone bill on your taxes. But, to prevent trouble, you need to keep a record of business calls, texts, or other use. Use a spreadsheet, notebook, or time-tracking app to document dates, times, and purpose for all activity on shared assets.
Lastly, if you use accounting software, then you can match up your receipts to the actual charges from your account. This is a great way to make sure that you're accounting for every expense, across all accounts.
Manage Labor Costs with Ease
Let's face it; an ongoing labor shortage, increases in wages, and looming recession make it challenging to hire and retain quality staff members. Labor costs can eat up a big chunk of your funds and without proper oversight, can quickly snowball out of control.
Start by figuring out your labor burden rate. Your labor burden rate is the total amount you pay employees, including benefits, extra compensation, and taxes. Once you know that number, then look at these critical areas to make sure you're optimizing every dollar.
Employee retention rates
Over or under scheduling
Communications between team members
Use Financial Projections to Promote Growth
Sure, financial projections are a requirement if you want outside funding. But, financial projections also help you make better business decisions, support company growth and reduce your stress level. Use a template, like this SCORE guide and Excel template, to tally your numbers. Documents that'll help you predict future income include:
An income statement, also called a profit and loss statement, shows your revenue and expenses for a specific timeframe.
A balance sheet provides a quick snapshot of what you own (assets) and owe (liabilities) along with your equity at any given time.
Cash flow statements use data from the income statement and balance sheet to show the actual flow of cash in and out of your business.
Find Incentives and Support for Women-Owned Business
As awareness grows about the barriers women entrepreneurs face, then hopefully, more female-focused solutions will turn up. For now, you'll find a variety of communities created by and for women. Plus, if you want to secure lucrative government contracts, then check out the various woman-owned certifications available.
Locate industry-specific associations for networking opportunities, such as ASJA for writers.
Join online communities such as women-only Facebook groups, usually called "Binders" groups.
Get certified as a woman-owned business in your city, state, or federal level.
Leverage Software Solutions Tailored to Your Company
Regardless of the size of your business, accounting software helps you organize your finances and track important information. For example, QuickBooks offers various solutions geared toward solo entrepreneurs up to the corporate level. Business owners also use programs like Harvest and FreshBooks.
With the right software, you don't have to use a calculator or worry about forgetting to invoice. You can forward emails right to your accounting program, set up automated reminders for late invoices, and get updates on what you owe for quarterly taxes. Most plans cost $15 or less per month and integrate with tax software, which eliminates so many headaches.
Advancements in digital solutions help women take control over their finances while providing a clear pathway to future growth. Understanding numbers isn't as challenging when you use the right tools and have a support team.
Jessica Elliott, writer and communications consultant, helps leaders in the energy, telecom, technology, and financial sectors make strategic decisions. You can find her on Twitter: https://twitter.com/7jessicaelliott and learn more about her company here: https://jessicaelliottwriter.com/