In addition to separate charge cards, you should maintain separate records for your business. This will help you record business income and expenses. You can use this to track your time, send invoices, record payments, see what products and services sell well, and review who owes you money.
You’ll be able to see how much income you had this month compared to the previous month or the same month last year. You’ll be able to see how you spent your money this month and compare that to last month or the same month last year. My favorite report is the Accounts Receivable Aging Summary. This shows me:
- who owes me money
- how much they owe, and
- how long I have been waiting to get paid
Any respectable accounting software will let you generate this report. It is mandatory. I use Intuit QuickBooks. You can launch QuickBooks and choose Reports à Customers & Receivables àA/R Aging Summary to generate your report.
This only works if you keep accurate and complete records in one place. I track my billable hours, reimbursables, and invoices in QuickBooks. I can run the A/R Aging Summary and know I am getting accurate information. If you run some of your transactions in QuickBooks, some in cash, and some in another tool, you will not generate an accurate report from any tool. Use one financial software package exclusively.
QuickBooks dominates the market. I’ve seen reports claiming QuickBooks has 94% market share among small business. Most freelance bookkeepers know QuickBooks. If you’re running your business on QuickBooks and become so busy that you need to hire a bookkeeper, you’ll be able to find someone pretty easily. If you use something else, you may have a tough time finding someone who knows it.
You can use QuickBooks to create your budget —it even presents a tutorial that can help you create one. You can plug in numbers for both your expected income and your expected expenses. Don’t forget your health insurance and FICA taxes from earlier in this book, when I challenged your desire to become self-employed.
Mark Anthony Germanos is the author of two books, Escape the Cubicle: How to leave your corporate or government job for something better and How to Make Computer Systems Work for You. He has faith in a slow but sure Sacramento business revival. Sacramento small business owners are leading the way. His second book, Escape the Cubicle, is for those who want to escape cubicle jobs and become successfully self-employed. Escape the Cubicle answers the questions: "How can I grow my business" and "How do I become my own boss."
Mark is the President of Cameron Park Computer Services. As a business owner and computer networking consultant, he has seen habits that successful Sacramento small business owners embrace. He helps Sacramento small business owners embrace those habits to increase their profits, efficiency and happiness. An advocate of Sacramento business revival, Mark believes everybody should run their lives like a small business, perform SWOT Analyses and use social media campaigns to improve business. He used to say “social media is stupid.” That was until he attended a conference and saw how Sacramento small business owners can use social media campaigns as a valuable tool. Since then, he has earned more than $40,000 in business via social media. His Sacramento small business clients also have five-figure returns. Sacramento small business owners that launch social media campaigns give themselves a comparative advantage over those who lag behind. Mark does not do everything, but his clients do receive great results and participate in the Sacramento business revival when they follow his advice.
Mark moved from Chicago and restarted his business in California with a cell phone and a Honda Civic. An active triathlete, he has a life, a dream wife and a dog. For additional details, visit http://markanthonygermanos.com. Twitter: http://twitter.com/markgermanos. Facebook: http://facebook.com/markanthonygermanos. LinkedIn: http://www.linkedin.com/in/markgermanos.