Tax time is a challenging time for a lot of business owners.
Many of us make it a lot harder on ourselves by leaving everything until the last minute, when really if we just did a little bit every day or every week, things would be so much easier at year end!
Do you track your numbers on a regular basis? Or do you wait to do it all at the end of the year?
If you don’t do it regularly now, you should start.
You are costing yourself more by leaving it. Not only is it a bigger job to pull it all together at once, but you could be spending more than you expect – and you don’t even know it.
Here are 5 tips to better money management for your business:
- Track Your Money Coming In
Knowing how much is coming in (your revenue) to your business is one of the most important things you can track. Money coming in is what will ultimately keep you in business or not. Yet so many VAs I know don’t track it at all. I use a daily revenue sheet, that shows me what I am anticipating in revenue for the month, and then I write down when it comes in. It’s an excellent tool to know if you need to find some extra client work in any given month to meet your targets.
- Track Your Money Going Out
Even if you track your revenue, you probably don’t track what’s going out on a daily basis. Tracking your expenses is even more important because you need to run a profitable business to keep going. Revenue is nothing if you are spending more than you are bringing in. Tracking your expenses effectively also makes your bookkeeper happy, because it means less work for them (and incidentally, that means a lower bookkeeping expense for you!).
- Figure Out What’s Left Over
Do you know how profitable your business is? When your clients pay you, there are many things to realize about those dollars. The first thing is that if a client pays you $500, that full sum is not yours to keep. You only get to keep the profit on that money. There are taxes (maybe 30%?). There might be credit card or other payment processer fees (3%?). There are all of your other expenses to run your business (how much is that? Do you know?). Your profit on that $500 might only be half.
- Plan Money Dates with Yourself
A coach of mine once suggested planning money dates – to actual schedule time to do the money part of your business. This is a brilliant idea, and one I have put into my calendar. This is very helpful if you avoid looking at your money.
- Analyze Everything
Looking at your money analytically helps you know whether you are charging the right rates. It helps you analyze where the money that’s coming in, is actually going – and shows you exactly what you are keeping (is it as much as you expected?)
Profit margins are the key to your business success, and you should be calculating these to the best of your ability. If you aren’t sure how to do this, get your bookkeeper to provide you with a simple spreadsheet that helps you see the numbers better.
It helps you to manage your money better. It helps you be a better business owner.
Money doesn’t have to be scary. Tax time doesn’t have to be scary.
Get some tools in place in your business to track it all regularly. When you are in control of it, you might even start to like it!
Tracey D’Aviero is a veteran VA and Founder of Your VA Mentor. Tracey trains and mentors professional women and men who are brand new to the VA industry or who have been struggling to make their business successful. Her mission is to educate professionals on how to build and grow successful and profitable virtual businesses in the VA industry by implementing systems and smart principles. Contact Tracey for speaking engagements, group training or private coaching at www.yourvamentor.com.
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