You finally decided to open your business, life is grand, and your main focus is putting all the hours in your day to nurture your baby. Like many first-time business owners, I have done precisely that.
In 2006 I began designing jewelry from home, and immediately began selling my pieces for money. I was purchasing inventory and supplies but was never keeping track of my purchases. I only focused on designing pieces. I didn't know anything about a business license or business taxes, and I didn't even care about keeping records of my receipts. I was most excited about designing pieces, connecting with my art, and seen the final result was my main focus. I build a business that was mostly a hobby, not generating enough profit to allow me to quit my full-time job but at that point, it didn’t matter to me if I was running a successful business. My main focus was on connecting with my art and the people who wore my pieces.
The only thing I thought I needed it was my wholesaler permit, till one day I received a copy of Los Angeles business license with my jewelry business name on it and additional fees to pay. That was the start of where I am now, and trust me when I say that I have learned the hard way.
In the last three years, I have work for a CPA firm who specializes in Business Management and Taxes. I have learned through our many diverse clients’ many possible solutions on how to get your documents organized and tax ready.
CPA's prefer if you bring your financials ready. What do I mean about financials? I mean a clean PNL (profit & loss report), and a balance sheet.
Most small businesses hire someone like myself to generate this forms, but if you don't have the budget, you can invest some time in doing this yourself on excel or perhaps invest in accounting software like Quickbooks, Xero….etc.
What should you track?
Each business is different, and depending on the entity of your business, you might have to track things differently, but here are a few things you should keep track off.
Revenue (money paid for your service)
Startup cost
Investments
Assets
Loans
Profit sharing for employees
Salary/payroll taxes
Gifts
Donations
Meal and Entertainment
Contractors
Attorney fees
Federal/State taxes or fees
Insurance
Auto
Inventory (if any)
My advice is, if you want to build a successful business from the ground up, you should invest in a bookkeeper or software and really understand your Business Financials. Staying organized is the key to a successful business. This will allow you to really understand if your company has been profitable or not.
Email me with questions to wealthylatina@gmail.com or comment below and signup for my news letter every month.