New Year, New Business

Happy New Year Business Folks. I hope you were able to enjoy a day of rest from business planning, but if not, let’s get back to work.

If you are looking back and seeing all the things that are wrong and looking forward with anxiety, you aren’t alone. I would say that January is a very stressful month just because we’re all thinking about our impending tax returns and worrying about how our business didn’t quite reach our goals.

Take a breathe. You can organize yourself to make your business and life easier.

Step 1:

Starting this year, signup to a file sharing system like Drop Box. This will keep your important files backed up in case of hard drive failure.

Step 2:

Organize your file system to make sense FOR YOU. I happen to keep separate folders per month and I name them as “1-Jan 2014″. Call it a pet peeve, but I hate to look at a bunch of folders in alphabetical order when I really want to see the files in order by month.

Step 3:

Get yourself a professional accounting system. I can’t say this enough times. My favorites to refer is Wave Apps, and Xero. Wave Apps is free forever, and Xero has a 6 month free trial. There are certain cases to use one over the other, but you can’t go wrong with trying them BOTH for six months.

So those are my tips for a brighter business. And yes, I’ve followed my own advice for a whole year and I’m not bombarded with my ziploc baggies of receipts to enter before taxes are due. True story.

 

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Credit- Love It Or Hate It

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Image courtesy of marin / FreeDigitalPhotos.net

Have you seen the show Princess on TLC? A “Princess” spends money like crazy using her credit card while avoiding bills and the financial burden that she places on her family and friends. Most of the young women turn around their lives, and they learn how to better manage their budgets. And how do they do it- they stop spending credit like it’s free cash!

This is the worlds perception of credit. It can be bad if you spend more than you can afford, and is good for when you need to borrow; when you need a new car or want to buy a house.

In the accounting world, it’s not so clear cut. As in debits, credits also swing both ways.

Lets go back to my example of yarn supplies.

debitexample2

 

 

I bought $100 worth of supplies and I learned that I had to make two accounts in my bookkeeping software. I made a debit to Yarn Supplies and a credit to Paypal. If I were thinking of credit in terms of a credit card, this example would make sense. My Paypal account isn’t my actual bank account, but a medium in which to pay for purchases. Eventually, if I keep buying yarn with my paypal account, my account would go to zero and I’d have to fill it up again by transferring my bank account money to paypal. But I digress.

In this new example, I sold a pair of Bella Mittens for $100 using my paypal account, and here’s how the old fashioned way of showing it:

creditexample

Now my credit has new meaning. I credited an account called Bella Mittens Sales, which tally’s up all my sale amounts and gives me a credit balance. A credit balance in a Sales(Revenue) account means that I am well on my way to getting rich. In turn, my paypal account has also increased, because it is an asset and debits increase asset accounts.

In Wave Apps, the transaction would look like this:

Click on “Add Income”

creditexample2

In review:

1. Credits increase revenue(sales or services) accounts.

2. Credits decrease assets(paypal, bank) accounts

3. Debits increase assets(paypal, bank) accounts

3. *Debits decrease revenue(sales or services) accounts

*For Experts: This isn’t a normal transaction. When there is a sale or service performed but not paid, it becomes an account receivable or payable.

Want to know more about Wave Apps? Sign up to my mailing list to get your free ebook!

ebookcover

- Learn how to make an account on waveapps.com

- Learn how to link your Etsy account

- Learn how to link your paypal account

- Learn about Transactions

- Learn about the the basic settings

- Learn about the Income Statement

If you are a blogger and wish to review this ebook, I’ll be very happy to send it to you!

Have a question? Leave a comment below!

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What The Heck Is A Debit Anyway?

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 Image courtesy of worradmu / FreeDigitalPhotos.net

When I was younger, say 20- I didn’t know what a debit is. I’d get confused when I went across the border and I was asked if I was paying with cash or credit. Everyone over on my side asked for débit (say it with a french accent) and I knew that once I used it, it would take money out of my bank account directly. I thought of my debit card as a money-sucker.

I was oblivious and most people are.

Now that I am a business owner, it has a new meaning. Debit is no longer just a drain of my money, but a way to organize balances.

Accounts with a DEBIT balance are your expenses, assets, and draws.

Expenses

Expenses are anything you purchase to run, manage, and maintain your business. For example, Etsy fees, Paypal fees, supplies of materials, website hosting, house utilities, advertising.

Assets

Assets are objects with monetary value. For example, cash, office furniture, car, building, account receivables (amounts owed to you).

Draws

Draws are the amounts that a business owner takes out of the business to use for personal reasons. This is equivalent to a paycheck from an employer. Congrats to you if you can pay yourself a wage!

Now lets apply this to your bookkeeping.

I bought $100 worth of yarn for last month. Old-Style, it would look similar to this:

debitexample2

Debit- yarn supplies account

Credit- paypal (more on this later!)

In Wave apps it would look like this:

First click on “add expense”

debitexample

In Wave Apps, the  “account” field automatically enters your money account, taking the first one listed. My money accounts are “Cash on Hand”, “Paypal” and “Paypal USD”, so I chose “paypal”, and then I have to determine what type of account( (or category, in this case) that my expense goes under. In the drop menu of category, I can choose from a list of expenses, or make my own, which I did, and called it Yarn Supplies. Simple right?

My Yarn Supplies account now has a debit balance(increase) of $100, and my paypal account has credit balance(decrease).

I purchased yarn, and I have an increase?? It sounds ironic right? In this case, like I said at the beginning, an expense account has a regular debit balance. Then it follows that because I debited the account with $100, it has increased and my total expenses to date is $100.

Most people are accustomed to only using and tracking their bank account. In Wave Apps, each purchase that you now make has TWO accounts. When you buy supplies, you make a supply account. When you buy advertising, you make an advertising account. When you hire someone to do your taxes, you make a tax expense account. You can call them whatever you like, but the point is to be consistent so that you can track all these accounts and be able to judge whether you are spending too much on advertising, or on materials, whatever the case.

Next time I’ll go over the second part of this, which is Credit. And no, not your credit cards ;)

Do you have an expense that you don’t know how to categories/label? Let me know in the comments below!

 

 

 

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What Etsy Sellers Need To Know About Bookkeeping

 ID-10029477Image courtesy of Winnond / FreeDigitalPhotos.net

When I opened my Etsy Shop, Petite Tuques, I didn’t know much about online selling. Instead, I started out knowing how to track my sales and purchases. To most, the mere thought of entering data into an excel sheet or a professional accounting system is frustrating to say the least. Bookkeeping doesn’t have to be tiresome, and I’m going to tell you why.

You Are A Pro

Being a pro in your profession, whether you are a knitter, painter, jewelry maker, or coach, you have decided to take things seriously, and work on your shop or website full time. With that, you are probably using professional systems that make your business easier to function. Bookkeeping should be  in that category.

The more you understand about bookkeeping, the more you will realize that you need to use professional systems, ie. QuickBooks, Sage 50, Xero, Wave- to name a few.

Train Yourself

I was referred to a FREE accounting tutorial website,  Bean Counter, where you can learn the basics of accounting. Terms like debit, credit, posting, special journals, balance sheet are all explained in detail. There are mini tests to do to test your knowledge- presented in a fun way that is guaranteed to make you smile. If you feel up to the task of learning how to book-keep for your business, I highly suggest starting there.

Pick Your System

There are many programs out there, and it can be difficult to choose. Most softwares are online now, and have free trials, so you can join and use a program for a limited time and choose which one to use for your business.

My suggestions are

1)Wave Apps – a FREE online based system that syncs with Etsy and Paypal

2) Xero – an online based system that is more professional and requires a monthly fee as low as $19 a month.

Both the above systems can be connected to an accountant/bookkeeper of your choice, which brings us to:

Outsource Your Bookkeeping

If you really, really, really don’t like to do bookkeeping, then outsourcing is the best thing that you can do for your business. Letting someone else do the work for you will enable you to focus on what you are good at.

The bookkeeper you choose will be a part of your business, and will know your business intimately, so you do want to interview and get to know your potential partners. Yes, I consider a bookkeeper to be a partner in the sense that bookkeepers are in the position to help the business owner with the financials, and should actively work to help the business owner save costs, where possible.

Work With Me

If you haven’t already guessed it, but my line of work here at Crafty Bookkeeping is bookkeeping. I suggest Wave and Xero because I am part of their Pro Network and I actively use the programs for my own businesses.

In Wave Apps, I can be added to your account via “Invite a Guest Collaborator” from the dashboard. I can then link your Etsy account (if applicable), bank account (if applicable), or paypal account. You are able to scan or photograph your receipts and upload them directly to Wave, which will then allow me to enter the transactions.

Xero has all the main functions as a traditional accounting software (like Sage 50) where you can enter transactions into a general journal, sale invoice, or purchase invoice. If are already familiar with the concepts of entering debits and credits, then this program should be easy to navigate. Unlike Wave Apps, it’s the bookkeeper who invites you to collaborate. I have a “partner edition” on Xero, which allows me to make an organization which I invite a client with limited uses into the software.

Hourly Rate

I’ve been searching the internet for info about what bookkeepers charge to clients; and what I’ve seen is that junior bookkeepers will charge anywhere between 25-30 dollars an hour. So I’m going to charge $25 an hour.

I want to make clear that you can email me with questions, or set up an appointment on skype, all for free. I want to learn about your business, and your concerns as you do business.

Give me a shout, and I can’t wait to start working with you!

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Welcome To My Bookkeeping Practice!

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Image courtesy of digitalart/ FreeDigitalPhotos.net

I am super excited to start this new branch of my life! My experiences with my online shop has been leading up to this, and I’ll explain why I’m changing gears.

Let me start at the beginning…

Back in 2007, I had one child and was expecting another. I was working full time, but I needed a career change. So I enrolled into an accounting course, and was able to graduate a few months before my second child was born.

I was lucky enough to be able to take a full year off of work before returning, but I decided early on that I wouldn’t return to my full time job, and instead I would look for jobs related to accounting.

That didn’t happen either, because I developed my skills for knitting and learned all I can about online business. Having an online business really helped my bookkeeping skills; it was something that I enjoyed doing, even when I didn’t have sales in my shop. (In case you are wondering, I am using Sage 50 (formally Simply Accounting) software to track my business)

Having an online shop was fun, especially when my kids were younger, but now they are bigger and I’m like any other House Wife of Canada, where I’m getting more involved in the school system and after school activities, and I took a look at my life and I wasn’t sure if we could sustain ourselves the way we do right now. We made some major changes to make it possible for me to stay home and it can be really easy to deviate and fall in the red. Like overspending on Christmas presents- but how can I NOT get every Stars Wars Lego Set??

So that’s where my thoughts went back to my formal training and education, and what better position could I be in? I’ve learned about business and what it takes to be successful, and I’ve done bookkeeping for the fun of it.

I am ready to be a professional bookkeeper, and I’ve taken steps to make it official by joining the Institute of Professional Bookkeepers of Canada, where I’ll be taking a test to be able to use Certified Professional Bookkeeper Designation after my name. I can also further my education by doing courses – which are required to maintain a membership at IPBC.

Now you may be wondering where I want to focus… and the answer is online businesses like Etsy. My experiences in business started with Etsy and I want to work with creative people. They’ve helped me over the years and now it’s my turn to help them.

Book Your Apointment Today

and get clear on your finances by:

- Setting up an account on Wave Apps, an official app that syncs your Etsy account and Paypal account.

- Going through the basics of the program

- Finding a bookkeeping schedule that works for YOU

 

Let’s Get Started!!

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