In many peoples’ personal financial world, the method is spend and forget. When you’re running a business, however, it pays to spend and remember. Keeping track of your spending can help you spend wiser and even save money.
Any money you spend on your business can be deducted at the end of the year on your taxes. Basically this subtracts the amount you spent on the business from your taxable income and lowers your taxes some. Believe me when I say this, when you’re paying your taxes, ANY deduction is appreciated.
Be sure to keep good records of everything you purchase, and hang on to your receipts. In the slight chance you get audited (if your numbers don’t line up on your taxes you could have potential problems with the IRS), it’s good to have all your records organized, and the receipts for all your business expenses readily accessible.
There are a multitude of tools available for helping your keep everything organized. You’ve probably heard of Quickbooks (ridiculously steep learning curve if you don’t have much accounting in your background). A lot of accounting software out there is actually made for accountants, so definitely try before you buy. Spending a month trying to learn a tool that’s unrelated to what you actually do for work can be a waste of time in some cases. Plus, a lot of those pro accounting packages cost some big bucks.
Don’t use a learning curve as an excuse to throw everything in a shoebox and forget about it, though. There are some easier tools out there, geared more toward people like you and me who want to be designers, not accountants.
I’ve been using Wave Accounting lately, which automatically pulls transactions from my business checking account and categorizes them. It also generates reports for me based on the imported figures, which is most helpful come tax time. Most other online tools and software packages will do this (and probably even better), but Wave is free.
A few options
Some quick options to check out (there are many more–these ones typically have more favorable reviews):
Most of these tools offer free trials, and I highly recommend trying a few out and finding out what works best for your business. Some have free accounts based on limited numbers of users or clients, or number of invoices sent out each month.
In this futuristic world which we live, there are constantly new tools popping up for every task you can think of. Just Google “best accounting software” or whatever you’re looking for, and you’ll find a multitude of options, with plenty of people arguing over the merits of each.
Tip: Anytime you enter bank or card information, ALWAYS make sure it’s a secure server, and that the company is reputable. Do a bit of research before you start giving away your financial vitals.
Calling all freelance designers!
What do you use to track your spending? We’re all looking for the best and the easiest, so please share!