Doing my bookkeeping each month is one of my favorite business tasks that doesn’t involve working directly with clients (honestly!). Knowing how much revenue is coming in and where that income is going is essential for staying in business. I was intimidated to learn how to use bookkeeping software, but now I have a new skill! I hate to think there may be practitioners who don’t pursue a private practice because they’re afraid of keeping the books.
Let me first say that I have had no formal education in bookkeeping or accounting (unless you count twelfth grade business math with a ten-key calculator), so my method may not be suitable for every business. I choose to do my own bookkeeping because I like the satisfaction I feel when the numbers balance and, quite frankly, with modern bookkeeping software it’s so easy I can’t justify paying someone else to do it (after an initial set-up learning curve). That being said, it may be a task better delegated for some business owners.
As a sole proprietor with no real equipment expenses or accounts
receivable (money owed to me for services already provided), my system is pretty simple. My checkbook register, savings account statement and credit card statement are all I use to stay up to date on my monthly financials. Credit card fees are calculated throughout the month as they occur by subtracting the amount deposited in my bank from the transaction total (I make a note next to each deposit). When I do my books, I first enter all my expenditures individually into the checking account ledger under the account label those funds were spent on (rent, office expenses, massage supplies, credit card fees, etc.). Next, I enter all of my massage revenue into the checking account ledger under the general sales account label. Then I enter any savings deposits or withdrawals into the savings account ledger. Last, I record any credit card purchases and interest charges into the credit card ledger.
As long as the balances for each ledger match the statement balances, I’m good to go! It takes me about half an hour each month to record the previous month’s information. I’ve learned from experience where to look if any accounts aren’t balanced, so the process has become much faster and less frustrating when I find discrepancies.
To stay caught up on your bookkeeping, use this hack:
The best part of having my business books at my fingertips comes when it’s time for taxes. I simply select an income report for the previous year from the menu and presto, I have a list of deductible expenses for my schedule C form. I’ve mastered a technology unknown to me before I opened Deep Heeling and have a better understanding of my business by maintaining the financials myself. Knowing how my business is performing month to month enables me to see the growth of a practice that I love!
Do you keep your own books or have someone else do it? Please share any experience or advice in the comments. Thank you!