I’ve been approached by numerous solopreneurs and home-based businesses for advice on how to sort out their bookkeeping. You never really think about these things when you start a business.
The three most common hiccups are:
- mixing personal and business-related funds;
- having trouble segregating or splitting personal and business expenditures; and
- ultimately, not having a clear picture of how much profit they’re truly making.
A younger me would have immediately put the accountant hat on, and fire off a number of tips and best practices, most simple would be maintaining a separate bank account exclusively for business and listing down all their regular expenses and identify those related to their business and pay those bills through that separate bank account.
But when someone approaches me nowadays, the first thing I’ll do is congratulate them.
It’s takes a great deal of creativity, passion and courage for someone to put their dreams into action, start a business and leave their comfort zone (e.g. a stable corporate career.) That is awesome!
And the thing is, when you’re getting to point of being overwhelmed with the paper works, it’s highly likely that your business/vision has taken off.
It may still be at a low altitude, but you’ve gone through the first hurdle. So I always say: “You’re now having to deal with bookkeeping and taxes, which means you’ve made it.” (It’s sort of a good problem to have, one way of looking at it.)
What’s the point?
For aspiring entrepreneurs, my view is just make sure that your idea is groundbreaking/innovative/and revolutionary, and that you deliver the best product and service. The rest will be secondary.
Say you’re into baking. Competition might be stiff, but if you focus first on perfecting those irresistible pastries and creating that eye-catching brand/marketing. When your creation becomes a hit, I suppose it’s not too late to then shift your lenses onto your costs and expenses and look for cheaper suppliers for your ingredients? Yes, that stack of receipts and bills surely have to be taken care of, but when one’s business takes flight, the rest will be easy.