The area that most entrepreneurs have a hard time with is accounting. This is especially true if you are a solo entrepreneur, as most home-based or road warrior based businesses.
Accounting is an area of business that all home-based and road-warrior business owners need to master. As a solo entrepreneur you should 1) do as much of the accounting by yourself as you can 2) invest in a good accounting program 3) have an accounting system in place 4) learn to keep your personal and business expenses separate, 5) work to actively improve your accounting skills 6) get professional accounting help as required 7) understand your real operating costs and 8) keep track of your important accounting data.
Here are our top 8 accounting tips for home-based or road-warrior businesses:
Tip 1 – Do As Much Accounting As You Can
A lot of entrepreneurs do not like accounting. I admit that accounting is not my thing at all and I have to almost force myself to do it. Maybe because it is not my thing that I understand a few things about why it is important that anyone who is an entrepreneur and especially those who are running a home-based or road warrior business need to do accounting.
If you do your own accounting then you are going to better understand you own accounts and business. You will better understand your profit and loss.
As a small business owner, you just cannot afford to have people doing things for you that you can do yourself. So if at all possible, try to do the basic accounting and bookkeeping work yourself.
Tip 2 – Learn An Accounting Program
There are many great programs you can get that will help you to do your accounting and basic bookkeeping. Some of them are free and others will cost you some money.
What program you decide to use may also be determined by where you live. For example we use QuickBooks online and we are in Asia. There are a lot of USA tax features for the USA QuickBooks that we just do not need or want. If you live and work in the United States one of the basic QuickBooks programs may be great for you, but if you do not, you may want to consider finding a program that will work well in where your business is located.
No matter what program you choose, accounting and bookkeeping will be so much easier with an accounting program. and if you can afford it to have a program for your actual accounting.
Tip 3 – Have An Bookkeeping System In Place
’The one place a lot of people fail is that we push our bookkeeping back to do at a later date. Bookkeeping is the one thing you do not want to push back or it can all get really messy.
If you can have a system in place this will help you to stay on top of your bookkeeping. If you can say that by the 15th of each month you will have done all the accounting and bookkeeping for the previous month, meaning you have closed and reconciled the previous month. To accomplish this you will spend a few hours each Friday to do your bookkeeping. Having this kind of bookkeeping system in place will help you to keep on top of all your accounting needs.
Tip 4 – Keep Business and Personal Expenses As Separate.
If you are running a home-based business or a road warrior business where traveling is your home, then one of the hardest things is to keep the business and personal expenses separate. This is where things can start to get a bit messy.
But it is also important that you try to do this as much as you can and you clearly look at what is personal expenses or bills and what is business.
As more people start to work from home this is also one area of separation that will continue to be important. People are going to need to learn to keep their personal and business expenses separate or the accounting and bookkeeping could get extremely messy or just be inaccurate.
Tip 5 – Actively Improve Your Accounting Skills
If you are not a CPA or you did not graduate with an accounting degree, the chances are that you will need to improve your accounting skills. Today so many YouTube channels give out some really great and valuable information. You can find some free training about accounting and bookkeeping on YouTube.
Also, read some accounting and other blogs that give you some good information. Find a way to increase your accounting skills and knowledge, as a solo-entrepreneur this is an important skill to have.
Tip 6 – When Required, Get Professional Accounting Help
There will probably be some accounting skills you will need to have a professional help you with. An example of this would be conducting a company audit.
So the rule of thumb for your accounting and bookkeeping should be that you do what you can do yourself and then you get the proper professional accounting help when and where you actually need it.
Tip 7 – Understand Your Real Operating Costs
The area that a lot of small businesses and solo entrepreneurs have problems is in understanding their real costs to run a business. For a business to be a profitable business an not a hobby you need to understand your real operating costs. If you are making a product then your sale price should be your supplies, labor, overhead, and profit.
This is where a lot of solo entrepreneurs make an error. They may work out of their garage and not think about the overhead so they do not count it. Or worse yet they only count the supplies and never really think about their time and labor.
To be in business you need to understand what your real costs are of running the business. The reason this is so important is that if you ever want to expand your business and bring on an employee you are going to have to understand this very clearly as you will then have a salary and other expenses to pay. If your business is not profitable it will be really hard to expand in any way.
Tip 8 – Keep Track of Important Data
Learn to keep track of important data such as expenses, sales, net profit, and gross profit. A lot of very good accounting programs will give you this and a lot of other data. This can help you to really understand the general financial health of your company.
Accounting is a very important aspect of any home-based or road warrior business. In fact, there are many who say that good accounting and cost analysis is at the core of any business success.
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To find out more you can read our blog on 100 Plus Home-based Business Ideas You Can Start Today by clicking here.
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You can read more about this but reading our blog 10 Tips to Travel and Run a Successful Business While On the Road by clicking here.