Alexis Krystina – The Charmed Life

bookkeeping for your small business

The Best Kept Secret About Bookkeeping For Your Business

As a new business owner, you’ve got a lot on your plate. All of a sudden you need to become an expert in copywriting, social media marketing, and taxes. Like seriously, you just wanted to help people and get some freedom or maybe you just started a business as a side thing but now there’s this overwhelm. Naturally, you figure it out. You ask around, you do research, you invest, you learn.
But when it comes to taxes and bookkeeping it just seems like there’s more conflicting information than useful information. The reason is because with this topic, there aren’t as many strict rules as you might think–there are options.
Before you start thinking about taxes, you’ve gotta have your money organized. That is exactly where bookkeeping comes in.
You know you have to track your expenses for taxes and you’ve heard of softwares like Wave and Quickbooks. You try them out only to end up even more stressed, confused, and overwhelmed than you were before.
I’m here to tell you exactly what you’re doing wrong and what you should do to get it right, release the overwhelm, and make things easy for you.
In a nutshell, you should not be using a bookkeeping software like Quickbooks or Wave unless you’re an accountant. These softwares were made for accountants who have the background knowledge and logic of how double entry accounting works. Did I just confuse you with that terminology? Good, that’s confirmation that you should be using a simple spreadsheet instead. The trick is going to be finding one that actually works well and we’ll get to that later.

Here are the top 5 reasons why your accounting software isn’t working for you:

  1. You’re using the default categories.

These categories are called your chart of accounts and they are simply your categories of income and expenses. These should be customized and that’s actually one of the first things I tell you inside of my free blueprint: Crazy Sexy Cash.
The only way to get value from your numbers is to actually know what they mean. You want to know how much you’re spending on Facebook Ads? Create a category specifically called “Facebook Ad Expense”. You want to know how much you’ve spent on courses or consulting or books or software, make specific categories for those items.
Most people use a software and keep whatever categories are there and the problems with this are that your numbers really mean nothing to you and you’ll for sure accidentally categorize the same expense in two different places. For example, you buy some pencils, you categorize them to a boiler plate category called “Office Supplies”. Cool. Next month you buy some more and for the life of you, you can’t remember if you categorized it to “Office Supplies” or “Office Expenses”. If you don’t categorize them to the same category every time, you don’t have consistency and you’ll never truly know how much you spent on those damn pencils.
Plenty of people think that there are specific categories that you need to have everything in so that you can do your taxes right, and that’s just not true. These categories can–and should–be whatever the frick n frack your little heart desires. The IRS cares a lot less about what your categories are and a lot more about you making sure you’re reporting all your income from every single source. That brings me to the next complication with softwares….

2. You’re not tracking everything and you’re missing tax deductions.

With softwares, you can link up your business credit cards and your Paypal and it’s supposed to be really effective–but let’s be real, you still gotta go in there and categorize things anyways.
But what happens when you make a cash sale? Or what happens when you buy something for your business through Amazon or at the store and–gasp!–you used your personal credit card!?
Well when you’re using a software, the way that you record these types of transactions is with a journal entry. Don’t know what that is or what it means? That’s confirmation that you should be using a spreadsheet!
The entire purpose of bookkeeping is about knowing your profit and in order to know it, you have to have complete finances–that means, everything–EVERYTHING–in ONE spot. All your income from ALL sources, all your business expenses from ALL sources. If you’re omitting income or expenses from your bookkeeping software then your numbers are completely inaccurate which makes all of this pointless. You don’t know your profit and you’ll either over or under pay your taxes. And you’ll be stressed. Moving right along…

3. You’re double counting your revenue and paying extra taxes.

So here’s the thing–you love Wave because the invoicing feature is so great. Let me tell you how it works. When you create an invoice for something you’re selling, your bookkeeping software will record that as revenue. Then later when you get paid, it’s not always matched correctly and you end up with another revenue transaction. If you’re not paying very VERY close attention, you could end up with $1,000 of revenue when you really only sent out one $500 invoice.
The same goes with your expenses. In Quickbooks you can set up ‘Bills’–so cool right? Until you double count the exact same expense. It’s the same logic as above. When you create the bill, QB records it as an expense. Then you pay it and if you don’t correctly match it, well then, now you’ve got two of the same thing in there.
So what happens when you double count your revenue? You overpay in taxes. What happens when you double count your expenses? You underpay in taxes and if the IRS finds out, be ready to pay the extra taxes plus major interest and penalties. The IRS doesn’t care if you made a mistake. It’s your responsibility to keep an accurate–key word there–record of your income and expenses.

4. You’re double counting your expenses.

Here’s another way you’re likely double counting expenses. You’ve got your Paypal all linked up nice and neat with your Quickbooks (but wait, QB and Paypal don’t really get along that well and if you’re an accountant, you know what I mean)… but let’s not digress. You also have your credit card and bank all linked up right? Transactions are flowing in, you think everything’s great.
But then you go and buy something and you sign into Paypal to use that credit card that you have linked to your Paypal. No big deal, right? At the end of the month, you head into your bookkeeping software and categorize everything–but did you notice that whatever it was that you bought showed up twice?
Transactions like this will show up in your PayPal as well as in your credit card sections of your bookkeeping software. The correct way to deal with this is to record a transfer from your credit card to PayPal and then record the actual expense in the PayPal section. What often happens is both of these transactions get categorized to, let’s say–“Pencil Expense” because apparently we’re buying a lot of pencils. So now, you’ve got $40 in Pencil Expense instead of $20.

5. You’re not performing reconciliations.

Come again, you think? Reconcili–what. All I have to say to that is–use a spreadsheet. Reconciliations is what you do to ensure that your bookkeeping is accurate. Any decent bookkeeping software has this as a feature–don’t think Wave does, I mean, it’s free for a reason, guys.
Reconciliations are exactly how you catch errors like the double counted transactions we just went over. On a small scale, you might notice the fact that you’ve got $1K in revenue when you know you only received $500. But when you’re getting sales left and right and you’re spending dollar after dollar, you won’t always notice.
If you’re doing reconciliations, you can find the error and fix it. But if you’re not then you’ll never know–and I can tell you most people who are using bookkeeping softwares don’t even know what this is. So now we’re back full circle to having inaccurate and incomplete finances that make no sense to us.
It’s no wonder people put their bookkeeping on the back burner. Why would anyone do anything that doesn’t bring actual value. It’s true that you have to track your finances for taxes, but in reality that is so secondary. Taxes don’t do anything for the growth or the success of your company. You know what does? Knowing your profit and using your historical data (like, how much did we spend on pencils last month?) to create an accurate forecast and make decisions for the FUTURE SUCCESS of your business.

So what are you supposed to do now?

Lucky for you, I have amazing spreadsheets–you can call me the spreadsheet queen.
The Income & Expense Trackers that I have give you all the capabilities you need and the basic versions (which you can grab below) can be setup in less than 15 minutes and maintained in less than 10 minutes a week.
You get up to 9 different revenue categories and 39 different expense categories that you can customize yourself!
Your profit is automatically populated–that means you don’t have to do a thing.
You can also add transactions from any source (including those you just bought with your personal card) so that you’ll always have a complete picture of your profit and you’ll NEVER miss a deduction.
With the premium version (found inside of Cash Empire HERE), you even have the capabilities to have multiple bank accounts and credit cards PLUS easily perform reconciliations–YAY for accuracy!!

Money management only works when it works for you. So ask yourself, is it really working for you right now? Or are you working too hard for nothin’?

You don’t keep up with your bookkeeping because it’s literally pointless–makes no sense, you don’t get it, you’re doing it wrong and can’t figure out how to do it easily, you get no value from it. Once you see the how amazing it is when you know your profit on the regular, it’s life changing–and you’ll actually keep up with things. And pay less taxes too of course.
If you want to avoid a major learning curve while still being able to know your profit, take advantage of every deduction, and have this entire process be easy, use a spreadsheet.
Bookkeeping Templates for Small Business | The best way to organize your small business finances and get every tax deduction #taxes #smallbusiness #womeninbusiness
Bookkeeping for small business | Learn the best small business finance tip to make your bookkeeping easy #smallbusiness #freelancer #entrepreneur #financetips
Business Financial Plan | The #1 tip you need to have in place to organize your small business finances for taxes and bookkeeping #financialtips #cashflowtips #bookkeepingspreadsheet
Taxes for Self Employed | The ultimate tax tips for business owners to organize their business finances easily #smallbusiness #organization #finance #bookkeeping
Taxes for Small Business | Business finance management for tax deductions and bookkeeping the easy way. #womeninbusiness #taxtips #womeninbusiness
Tax Organization for small business | business finance financial planning for self employed and small business to take every tax deduction #smallbusinesstax #taxtips #financialtips
tax saving tips for small business | bookkeeping templates for tax savings in your small business. Organize your business finances and do your bookkeeping easily #bookkeepingspreadsheet #smallbusiness #womeninbusiness

Stay Connected!


Don’t forget to stay connected on the socials!

Get Mystic Money for just $7 for a limited time!

Mystic Money

♥ The Mystic Money 30-page Workbook & Financial Guide: Discover your Magical Money Method.

♥ How to setup an aligned bookkeeping ritual.

♥ Feel empowered about becoming an LLC or S-Corp & knowing how to file taxes.

♥ Learn how to use the moon for your money goals & tasks, and how to tap into the astrological elements for support.

♥ “Make Money in Your Sleep” meditation & sound bath.

Get it for just $7 for a limited time