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Are You Self Employed? - Who Is Watching Your Bottom Line?

By Edited Jan 13, 2016 1 1

Are you self employed? Then you know what it is like to wear all the hats in running your business.

The problem with that, is that there is not always enough time to be working on the bookkeeping part. It may be worth outsourcing this part.

You need to have your books set up from the beginning. With all the accounting programs on the market now, you could have someone come in and get yours setup for you to keep up, or have a bookkeeper keep track of your income and expenses.

My sister runs her own electrical business, and absolutely loves what she does, but hates the bookkeeping part. What would happen, is she would have good intentions, but at the end of the day the "in basket" would just keep getting bigger. She would get the invoicing done and collect the payments, as that is what keeps her business going, but everything else just got missed.

She wasn't always paying her bills on time, and many times it was not because she didn't have the money, she just didn't want to look at them! Many days, she was doing the electrical work during the day, and quoting jobs at night, so papers and bills were the last thing she wanted to see. So, she was not getting a true picture of where her business was at. After a few failed attempts at doing it herself, she called me to help.

We got her set up, and then I worked out her expenses, and she was shocked to see she was paying late fees, and many bills could have been less, if she budgeted better.

We worked out a weekly pay for herself, instead of just pulling out money here and there at the ATM, and we set up an emergency fund. That part is really important if you are self employed. One sick day, or low customers can set you right back, if you don't put any of your money aside. This goes for the business as well. You should try and put away some money for just in case tools break, or you need to rent equipment etc...

After she was more aware of the numbers of her business, she knew how much she needed to make each day to be making a profit, and she was able to streamline bills, and she set up equal billing for many of the bills such as insurances. This means that instead of scrambling to pay the premium annually or semi-annually, that she was able to pay the same amount every month. This helped the business budget for those lean months and the good months.

When she has a good month, she puts some away for the not so good months. For example, she knows that January each year is very slow. Rather than let the credit cards takeover, she tries to budget the rest of the year to allow for a slow January.

If you run a small business with employees, or you are self employed and wearing all the hats, you know how important it is to keep up with the paperwork and bills. Many business's have failed simply because they did not keep up their paperwork to see problems coming, or make government remittances.

Outsourcing your bookkeeping will be another expense, but if your main goal is to run the business you love, and not deal with the bookkeeping then you will save money in the end, as your bills will be paid, you will draw a regular salary, rather than taking out money here and there, and they will help keep you on track.

This way you can spend the time working on the business you love!

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Comments

Mar 13, 2010 2:00pm
Sullysee
Yes, I fall into this category and your article is very helpful.
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