Mind on Your Money

If you’re reading this you’re probably an entrepreneur pumped to take your business to the next level. Or, maybe you’re just curious about PlantQue’s journey- either way, welcome to our blog dedicated to bookkeeping.

Unless you have a knack for numbers, just the word bookkeeping may send you into a spiralling frenzy. And if you’re anything like me, numbers might as well be Greek and all financial matters are therefore delegated to a skilled expert. 

Still, as a business owner, bookkeeping is an important aspect which demands a certain level of knowledge from us. 

Firstly, what is bookkeeping? To keep it simple, bookkeeping is what we refer to as the recording of day-to-day financial transactions i.e. every dollar spent and every dollar earned, as it pertains to your business. 

As a reliable tool for monitoring business expenses, bookkeeping will detect if your business has experienced growth, or not, while managing costs to prevent financials from getting rough and out of control.

To many small businesses’ demise, this critical step is overlooked by eager entrepreneurs hyperfocused on making a sale or chasing down customers. Ultimately, knowing where your dollars go is high-priority for your success.

With the growth of any business it is common and expected to spend more as you earn more. Sometimes an increase in your expenses can be seen as an investment for an increase in sales at a later time. This is usually highlighted in your Business Plan (wink wink).

Five years down the line you’d be able to recall that the April 2021 jump in expenses was due to your rebranding exercise- improving your logo, social media, product packaging etc., allowing you to reference the amount spent if you decide to do it again.

For PlantQue, some important bookkeeping items would be the monthly cost to upkeep our plants to prevent the worst (not to be dramatic but plants die). PlantQue would also consider marketing costs to ensure our plants get off the shelves before making a deep-rooted home in the shop… forever.

If procuring and storing an item or performing a service costs more than your selling/list price, your business is experiencing a technical accounting term known as a loss.

Key Words to Know-

Income– Money earned through a sale. Also known as revenue.

Expenditure– Money spent on a specific item for a specific purpose 

Profit- Difference between income and expenditure. If the number is negative, the business is experiencing a loss.

Invoice– Financial record used to receive income. Should always include the business name, transaction date, a unique invoice number, brief details on the goods or service and amount to be paid. Here’s a sample invoice to help you get familiar.

Expense Receipts– Financial record for money spent on the business. Similar to what your invoice should look like, it should always include the supplier’s name, transaction date, receipt number, brief description of goods or service received and price paid.

Here’s why you need bookkeeping for your business:

Keep all your financial reports in one place, on time and perfectly formatted.

Monitor monthly sales and trends in growth or decline. 

Easily identify largest expenses and make adjustments where possible. 

Prepare for future planning and decision making.

Gain information required to produce financial statements.

Prepare tax filings in an organised and timely manner, avoiding future misrepresentations. 

Discipline in managing money to ensure profits.

With a firm understanding of the basics you’d be able to avoid costly mistakes that jeopardise your business’s financial health. 

Accounting software such as Xero Accounting, Quickbooks, Freshbooks and Zoho Books all help smooth things over for your business. For a list of options and to get a proper rundown on what may be best for you, click here. 

Bookkeeping Tips:

✔️ Record every dollar spent and earned whether on a spreadsheet, notebook or bookkeeping app.

✔️ Scan and record receipts for all expenses. 

✔️ Use unique invoice numbers, recording in a sequence. 

✔️ Keep a copy of bank statements. 

✔️ Avoid using money from business to pay for personal expenses. Decide on a fixed monthly salary. 

✔️ Make note of personal money invested into the business and decide on an reimbursement schedule. 

Numbers seem scary, right? Well, if you’re not a numbers person, you’re in good company; about 50% of the world isn’t either. So make sure you get some help from the experts so that you aren’t stressing about it. 

We’re all about doing what we do best: for us it’s running a good business. As for your finances, whether it’s outsourcing your accounting advice or finding an accountant who keeps things simple for you to understand, don’t neglect putting your numbers in a gear and turning your business into a well-oiled machine.