When you have a business it’s important to keep accurate records. Here are some ways to help:

1. Open a business checking account. Check with some banks in your area for fee-free business checking accounts to avoid unnecessary expenses.
2. Deposit all money you earn in your business into your checking account, and pay all your bills through your checking account. If your expenses exceed your income, deposit money from your personal bank account into your business account and track it as a loan to your business.
3. Apply for a business credit card, or get a business check card through your bank’s checking account so you can make online purchases.
4. As much as possible, keep your business purchases separate from your personal purchases.
5. Maintain a file or create an envelope system for your business receipts.
6. Create an invoicing (when you create a bill to collect money) or sales receipt (when a client has already paid you) system to help track your income. Some business owners create a template in a Microsoft Word or Excel. When you create an invoice or sales receipt, print a copy to keep in with your client’s records. Depending on your income tracking system, you may want to print another copy and store all your sales for the year in a folder, binder or envelope.

How should you track your income and expenses?

I personally like Quickbooks because:

1. You can easily create invoices and sales receipts
2. You can input bills that need to be paid later, which can be handy for those who buy and sell products
3. You can easily run sales tax reports
4. Tracking expenses is a cinch, and they can be linked to your checking account, cash account and credit card very easily
5. You can run financial reports very easily
6. Reconciling accounts is an easy task, and if your bank and credit card company have online banking services, you can download transactions and reconcile your accounts quickly and efficiently.
7. If you have an accountant, you can give a copy of your file to your accountant at tax time and it will be easy for him or her to do analyze and fix your books

The downside of Quickbooks is that there is a learning curve. It’s not as simple as Quicken, because the program is based on double-entry accounting. However, there are great tutorials, books and training classes you can take to learn Quickbooks, and once you get the hang of it, it’s fairly easy. You may also need to upgrade every few years because Intuit, the company that makes Quickbooks, doesn’t support older versions. There are several editions for Quickbooks, so you should look at the different types to see which one would work best for you.

Another option is to use Quicken’s Home and Business Program. This may work well for those who use their personal accounts to pay for business expenses or if you want to be able to track both your personal and business finances in one program. I honestly don’t have much experience with the Home and Business software, though I use Quicken for my personal finances and it is different from Quickbooks.

A third option is to track your expenses using a spreadsheet program like Excel. This can be a great option for those who really don’t have many expenses and sales. I’d suggest creating one workbook with 12 worksheets for each month of the year. An additional worksheet can be created to create a profit and loss statement, where you’d use formulas to add up the totals for each month. If you’re really spreadsheet savvy, I’m sure there are ways to link an invoicing system through Excel to automatically enter your income into your tracking spreadsheet.

And of course, another option is to use good old paper and pencil and manually track your income and expenses. You could use a double entry accounting book or simply a spiral notebook.

Depending on the complexity of your practice, it’s up to you whether you hire a bookkeeper or accountant to help you with your income taxes. You may want to consider consulting one as you start your business or if you are changing your business model or adding a new service or product. If you decide to use Quickbooks, you may want to get some help from an experienced accountant or bookkeeper who can help you get your Chart of Accounts set up. Your Chart of Accounts is a listing of all your expenses, bank and credit accounts, and types of income. Someone trained in Quickbooks can help you to properly set up this list so you start off on the right foot. Otherwise, it may take some time if changes to the chart and adjustments need to be made.

As always, let me know if you have any questions about tracking your finances. Tomorrow we’ll take a look at another aspect of getting your business structure organized. Have a great afternoon.

Tags: accounting for doula business, become a doula, bookkeeping for doula business, start a doula business

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