Starting your own business is so exciting, right? Well, maintaining the records and keeping track of all the expenditure and income is equally stressful. So welcome to “How to cope up with financial stress 101?” or in other words, how to keep track of expenses while running a business.
But First, Foundation!
Establishing the foundation of your business is the most important part of starting a new business. Creating business accounts will help you with the management of your bakery business finances by keeping all of your business funds in one place.
Create a business checking account to keep your business transactions separate from personal finances. To do this, you will need proof of business such as a DBA or LLC license. Having a business account is perhaps the most efficient and easiest way of keeping a watch over your income and expenditure as it helps you keep your money organized.
Track It Like It’s Hot!
Tracking your accounts is the immediate next step. Let’s see, you’ve opened up a new business account and now you are wondering “What’s next?” Keeping ledgers of your all type of expenses and incomes is the next step. You have to think of your business as an exam. To pass, you’ve to study multiple subjects. Similarly, to run a business without any hassle, you have to keep a close watch over your financial ledgers.
- Professional/legal fees
- Advertising expenses
- Wages of your employees
- Maintenance of equipment
These are the important and recurring expense and income accounts of any business. Keeping ledgers will only help you in the long run. So make some time and get acquainted with the basics of accounting. Sounds fun, doesn’t it?!
Don’t Budge On Setting A Budget!
Setting a budget for your expenses is like making a travel plan; you want to go only as far as you have the resources to. Set up a budget for your business including the predicted income, expenses, cost of the sold goods, and provisions for unexpected or sudden expenditure. Study the market rates for your food items, their average selling cost and the average cost of ingredients required. Plan it out carefully to do your business safely.
Mo’ Money Mo’ Problems!
As your business grows, the income and expenses grow as well. To keep up with these, you may need to hire help. If you’d rather do it yourself, money management tools such as Excel, Google Sheets, or QuickBooks will come to your rescue. The advantage of using a tool like QuickBooks is that it comes with a series of preset accounts for different categories or different types of businesses.
Break Records With Your Records!
Keeping the record of all your receipts and important invoices is important for a number of reasons. Be it digital invoices or the good old paper printed receipts, keeping all the important invoices of your business organized will always benefit you. For legal reasons or just a precaution or a proof of ownership of certain equipment, updating your records is the first thing you will need to do after making any important transaction.
Besides, business receipts and invoices are important to rectify any possible bookkeeping errors and substantiation of tax deduction. When you start your business, create a central filing system with different files or folders for each category of expenses and file the receipts in their appropriate locations as you complete your ledger entries. This also comes in handy as the Internal Revenue Service recommends retaining tax records for three years under normal circumstances, and up to seven years for security losses or bad debt.
So it will only protect you from getting a bad rep!
Keep A Close Eye On All ’em Entries!
Review your business account entries regularly to get a clearer idea of your financial health and to always keep things in control. Paying close attention to your business is like paying attention to a child, if you look away it will make a mess. So always keep a close eye on those expenses and income and you should be fine.
Regular balancing of ledger entries and reviewing of budget projections can help you see where you are in relation to your business goals. This process can also reveal bookkeeping errors, cash shortfalls or other discrepancies between budget projections and actual expenditure and income.
All These Charts!
Let’s hope you loved drawing as a kid, because you will be drawing many charts for your business! Develop a chart of all your accounts of income and expenditure such as ingredients, cooking supplies, equipment, packaging material for shipping and so on… and you won’t need to be constantly worried about losing track of those.
With Great Power Comes Great Responsibility!
As your business expands, you will run out of time worrying about everything all by yourself and handling everything single handedly! So when the time comes and you feel the need to update your team and update your mannerisms of handling your business, hiring professional help such as a skilled accounting professional will become necessary.
So we hope the time for you to expand your team comes very soon, and you find the right person to take care of your responsibilities for you.
We hope you loved this article. For further information regarding starting a new bakery business, you can go through our related articles listed below. Thank you for reading!
See Also: Biggest Learnings And Marketing Tips For A Baking Business| Tips And Tricks To Growing Your Baking Business| How To Find The Right Audience For Your Baking Business| Administrative Tasks Checklist: Bakery Business Edition