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TPD Tips: Accounting

When starting a business let’s face it money will be on your mind as how do we do anything without money these days!?

When starting a new business the questions you may find yourself asking are:

*How much should I invest to get started?

*What is the profit margin I am making on each sale?

*How much do I need to make on a monthly or yearly basis to break even?

We want to break down the basics for you and hopefully make spreadsheets and tracking your funds a little less complicated and provide you with the insight of how we are currently managing our finances behind the scenes.

The Initial Investment

You have this great idea and can’t wait to get started on everything to make it happen, but then you have the thought of how can I afford to do this? Don’t worry we were right where you are not that long ago.

Step 1: Think about how much you can afford and are willinging to invest. Remember you may not see this money for a while or get it back at all if you make poor decisions in the beginning.

Step 2: Open a bank account that is just for your business earnings and expenses. Separating it from your personal accounts will help you see exactly what you have at any point in time.

The Spreadsheet

The amazing thing about spreadsheets is that you can create them all within your Google Drive which is free to use as part of the amazing features within a standard gmail account.

Your spreadsheet will allow you to track your sales and expenses and provide you with an overview of where your money is going and how it is flowing in. By tracking how your money is working for you on paper you will be able to visually see opportunities for where you may decide to cut expenses or what product is selling well.

To calculate your profit margin, you need to know what your product costs to make and what you plan to sell it for. The difference is your markup and this will help you grow towards fulfilling your financial goals.

Having a spreadsheet that you update regularly throughout the financial year will make it easy when it comes to tax time as most of the hard work will be done! We update ours on a monthly basis currently and we document our sales and expenses on seperate spreadsheets.

So why don’t we use paid software? Currently we have decided not to invest in accounting software as we want to keep monthly expenses to a minimum where possible. In saying this we choose to have our a third party accountant lodge our return who are knowledgeable in what can be claimed back.

If you need help setting up your initial spreadsheet get in touch with us – hello@theplannedduo.com

Setting your goals

It’s all well and good to see how you are making your money and where it is going, but no business wants to simply break even. This is where goal setting takes place! Could you call us The Planned Duo if we didn’t have a plan for our finances?

Money can be overwhelming for a lot of people and be placed in the too hard basket. Our question to you what is your financial goal? What do you want to make on a monthly or yearly basis? Do you want to start by paying yourself back your initial investment first so you have a clearer idea of how well your business is tracking? Whatever your goal is, when it comes to finances we suggest start with one!

For us, our goal has been to get to a position to pay back our initial investment and maintain low overhead expenses in order to grow.

Our advice is to set a realistic time frame based on your current circumstances and aim to exceed your expectations. If you don’t meet it within you desired timeframe you may need to rethink your strategy, but don’t give up! You will get there and once you do mark the occasion and celebrate it!

Consistency

When it comes to finances the way you will stay on top of it all is being consistent. Checking your accounts on a regular basis will help you see if you were charged incorrectly or you had a fraudulent transaction occur – Yes, this happened to us!

By staying on top of what is going on within your account regularly (we suggest once a month for a new business) by the time you get to the end of the financial year you will simply be able to forward your spreadsheet to your accountant and you are done!

As we continue to grow we will keep you updated about what accounting software we integrate into our business so don’t worry!

If you are new business and needing some assistance establishing an effective finance strategy to track your sales and expenses simply reach out via email – hello@theplannedduo.com

With happiness,

Ash + Lauren

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