#26 What’s the number one…?
Today we’re mixing things up a bit and not focusing on one topic, but instead, on rapid-fire answers to the most common questions that I’m asked. I get a lot of questions that usually start with, “What’s the number one…?” because people want a straight answer on my favorite thing or my biggest piece of advice.
So today we’re tackling topics like accounting platforms, managing your finances when you start your business, what I wish I knew about bookkeeping when I started my business and more.
Get ready for this rapid-fire episode that is filled with questions and answers!
What we’re talking about
- Starting Your Business
- Structuring Your Finances
- First Step In Business Finance
- What I Wish I Knew When I Started My Business
- Categorizing Transactions
- Best Bookkeeping Tool For An Online Business
- Best Money Earning Hack
What’s the first thing I need to start with in my business finances?
I’ve said this time and again and will continue to say (it is my soapbox after al) that separating your personal and business finances is the first thing you should do in your business. (Check out the episode I did on how to separate your business and personal finances here)
What’s the best way to structure your finances to keep them easy and clear?
Going hand in hand with what you should do for your finances when you first start a business is how you should structure your finances. Separating your personal and business finances is the very best way to structure your finances to keep your bookkeeping simple. This includes opening a business checking account. Just that one tiny action will have such a tremendous effect on your financial organization.
What one action should I make a habit to help start getting my business’s finances in order?
If you want to get (and keep) your business finances in order, I suggest doing your bookkeeping on an ongoing regular basis. Once a week is ideal and, at the very least, once a month. This habit is one you’ll carry with you throughout your business journey and it will ensure organization and stress relief.
To learn more about how long you should expect to spend on your finances and what to actually DO once a week, listen to this episode.
What’s the number one thing that you wish you knew about finances when first starting your business?
I wish I knew how much happier I would be if I actually dealt with my money! I thought avoiding my finances meant I was avoiding stress and overwhelm. But, the truth is, my biggest source of stress was my avoidant behavior. I was living in a constant state of fear and that caused money panic.
By paying attention to my finances– which meant engaging with them- I began to see the full picture of my money. Even if the full picture wasn’t exactly what I wanted, I felt better knowing where I actually was instead of worrying about hypothetical unknowns.
What was your biggest challenge with categorizing transactions correctly?
Simply knowing what “correctly” meant and the right way to categorize transactions. In my early bookkeeping days, I had a general understanding of what I was doing, but not the same in-depth knowledge I have now. I spent A LOT of time researching tax deductions and basic accounting principals.
The biggest challenge people new to bookkeeping have is understanding how money moves through business and how to properly reflect that, from an accounting standpoint, in the books.
What’s the best bookkeeping tool to use for an online biz?
This is by far the number one question I’m asked! My usual advice is to find the right tool for yourself, based on your business’s uniques needs. BUT, I know you just want me to tell you what to use.
Using digital bookkeeping software is the best way to go about managing your business income and expenses because it automates the work and there’s a lower risk of human error. My favorite software is QuickBooks Online (affiliate link), which isn’t perfect but is, in my opinion, the best that currently exists. You can see if QuickBooks Online is right for you here.
What’s your best money hack to earn more money?
The business model strategy I believe in and practice is to diversify your income streams. Diversifying protects your overall business from unpredictable and unexpected things because only one area takes a hit, while the other areas are (hopefully) preserved.
Diversification isn’t just about having multiple income streams and a combination of active and passive income. It’s also about the types of clients you work with (like corporate clients and individual clients), how you work with people (one on one and groups), the sales channels you use, and your price points.
Here’s the metaphor I think of: If your business is a tree, your revenue is the root system. Diversification means having enough healthy roots growing in different directions that if one root gets sick, is damaged, or dies, the rest of the roots are healthy enough to sustain the tree.
What’s your number one question about business finances?
#31 How do you deal with collecting money from clients? As a business owner, one thing we all have to do is collect money from clients for our products and services. Today we are discussing the best ways to collect money from clients, otherwise known as accounts...
#30 How do you prepare for unexpected business costs? As a business owner you’re bound to have unexpected expenses come up at some point? It’s not if, it’s when. These expenses could be big or small and being prepared to take any kind of financial hit is something...