Probably like the other 99% of creatives I know, I HATE bookkeeping. I’m talking legit painful. But, while I think crunching and categorizing numbers is agonizing, I also recognize that it is a necessary evil for running a business properly. As a creative business owner, you’re not only in charge of coming up with the fun, creative ideas but you’re also in the business of RUNNING a business. Right?
Related: Building Good Money Habits for Your Business with Justine Lackey
When it comes to staying on top of those financial “to do’s,” creatives aren’t known for being expert accountants. In this article, I’ll cover some bookkeeping basics that you need when starting your creative business.
Bookkeeping Basics for Creatives
Open a separate bank account
This is bookkeeping 101. Do not mix your personal finances with your business finances. All of the income and expenses that come through your business should be kept separate from the account you use to pay for diapers and nail appointments (unless that can count as a write off for your business of course!). The thing with bookkeeping is, you need to categorize and track every bit of income and expenses. If it’s organized in a way that’s easily broken down, then you’ll have a much easier time during tax season!
Use an accounting software
I use Quickbooks to track all of my income and expenses, send invoices and more. Using some sort of accounting software is going to make your life SO much easier, especially if you are doing your own bookkeeping! I hired a bookkeeping service to free up my time for other project. BUT, if you can’t afford a bookkeeping service, Quickbooks or something like Dubsado will make your life MUCH easier and more automated!
Reconcile and track your accounts REGULARLY
I remember the days, early on in my business, when I just pretended my bank account didn’t exist. I didn’t want to know what was inside. As long as I avoided looking at it, I didn’t have to know how awful it was. Right?! Well, not reconciling your accounts and tracking the progress of your business is a sure fire way to end up in the pits with your biz. As scary as it might be, you should be logging into your account and monitoring those transactions weekly, if not daily! A bookkeeper, if you hire one, should be in there every day, labeling and categorizing all of the new transactions. That way, you can run accurate reports on your finances and be prepared (and not backlogged) for tax time! Not reconciling your books is the easiest way to make huge mistakes in your business and run into issues!
BONUS! Analyze Your Costs
Another bonus tip on bookkeeping for creatives is to analyze your costs and have a pulse on your break even point. That calculation can help you determine if a product, service, course, etc. is worth launching or not (or maybe it needs tweaks). We have an amazing template for a Break Even Calculator inside our shop. This is what we use to determine what we should charge for our courses, shop products and it also helps us analyze how many sales it would take to make back our costs!
Related: Struggling with Pricing Your Artwork? Start by Analyzing Your Costs
A big reason why I was so terrified of looking at my bank account was because I wasn’t charging enough for my products and making back my costs! I had no clue how to price my products and services and the guessing game wasn’t cutting it. Now I know exactly what something costs and how long it’s going to take to make back those costs. And now I can stay in the black with my business and bookkeeping isn’t so scary!