Bookkeeping woes? Candus Kampfer says: Keep it simple.
Candus Kampfer knows bookkeeping. When her hair stylist cried with relief after Candus showed her how to pull her accounting reports, Candus knew she wanted to help others. She began making short, focused video tutorials about Quickbooks in 2014, and her following grew.
Candus big message: keep it simple.
It doesn’t need to be overcomplicated.
But remember that bookkeeping is a vital part of your business. It’s not just for doing taxes! Track the numbers throughout the year.
Numbers are a black and white way to view your business.
How to get started?
Start by opening a business bank account; don’t co-mingle your personal and business expenses!
Keep records on paper: Use columns to designate expense categories, e.g fuel, office supplies, meals and entertainment [Hint: keep the categories fairly broad].
Or use an Excel spreadsheet to track your numbers
There are three types of reports you should be pulling:
1) Profit and Loss
- the top–your income, what you’re being paid from your clients, based on categories of products or services
- below–all of your business expenses
- bottom line: did you make a profit or take a loss for the time frame chosen
Questions to consider when looking at the P&L report:
- Have you been making an income in the areas you expected to? Are you making more income in one area over another (e.g. producing books vs. producing audios)?
- Keep track of your expenses; where is your money going, and how does the outgo compare to the income?
- Compare a date range to a previous date range, e.g. this month vs last month.
2) The balance sheet
All assets, all liabilities, all equity, and your net worth (Hint: The net should match the number on your P&L if you chose the same end date).
The balance sheet is a snapshot of your business at a particular moment.
3) Sales by Item Summary (this report is specific to Quickbooks)
For creating invoices within Quickbooks, use “items”; items are more detailed than the categories on your P&L. These items give details on the services and products you provide. It will show you the income you’re generating on this specific services and products, and their percentage of the overall income.
Knowing this allows you to proactively guide the business in the direction you want it to go. For example, you may see you need to do some marketing to grow a particular area.
How to determine profitability in a service-based business
Add a value to your time tracking
Set up a non0payroll item with your service item and cost
I use Toggl for time tracking. For most of us, the free version is fine—it’s what I used for years. I only upgraded to the paid version when I wanted to start drilling down into the statistics of how I was spending my time.
To get your effective hourly rate, you have to track all business-related hours worked, not just billable time.
Quickbooks: for each customer, you can enter billable AND non-billable time. When you go into Profit & Loss by job and by customer, it tracks the costs for you without counting it as income.
The entrepreneur’s struggle: understanding the value of your work
- What would I like to earn?
- How much time do I have to work per month?
- Being confident with your billing comes over time.
- Kind, loving praise from clients helps!
Discomfort with invoicing (whether it’s on your end or your client’s) can be alleviated by stating things clearly in writing.
Trust your gut feeling on whether it’s a good match between you and a potential client.
Routine bookkeeping tasks
- Download or manually enter your bank transactions
- Enter expenses
- Track your income
- Reconcile bank and credit card accounts
- If using desktop version, back up your Quickbooks to an external drive (or any accounting software) [Hint: Do not use Dropbox to back up Quickbooks]
P&L, pull it every month and compare YTD or month-to-month; are you where you want to be?
Balance sheet, pull every quarter or so to make sure everytyhing looks
Sales by item summary, pull every month. This gives a breakdown of your income and where it’s coming from
Candus has a free minicourse on how to get started with Quickbooks in under an hour (canduskampfer.com/minicourse).
What I use to back up my data:
Toshiba external hard drives for Mac (with Time Machine)
(here’s a model that works with PCs)
Whenever you’re learning something new, be patient and kind with yourself. It can be overwhelming!
If you’re interested in helping your clients learn about their genetic genealogy (we talked about it on episode 16), keep an eye open for a special sale on the 23andme kits. They may be offered at a reduced price during Amazon’s Prime Day. It starts at midnight on July 16, 2018 and runs for just 36 hours.
Please consider leaving a review (or just a rating) on iTunes. Thanks for helping to spread the word!
Now go out and save someone’s story.