Being successful in direct sales requires more than just holding parties and booking sales. As a business owner, you find yourself spending money to run your business as well. How do you know if you are holding enough parties? What records should you keep? What system should you use? Having and using a simple accounting system can give you the peace of mind you need by providing you important information about your business income as it compares to your business expenses.
1) Choose accounting software to use. Before you start making or spending money it is important to decide how you will record your transactions. Luckily there are inexpensive online software options available for less than $20/month.
2) Set up a separate bank account just for your business. This saves you time because you do not have to sort out your business from personal expenses. It also helps you to have a clear picture of your business expenses. Come tax time you need to be sure you are making a profit so that your business isn’t reclassified as a hobby, costing you the loss of your business expenses as deductions.
3) Link your banking information to the accounting software and save time entering transactions. Once you have initially told the accounting software how to handle each transaction it will suggest previous entries to you next time. A quick review and click of a button and you’re are done!
4) Get familiar with the terminology used in your industry and how it translates to your accounting records. Commissions paid to you are your income. Items purchased to use during shows are office or shop supplies. Pamphlets or samples handed out are advertising and promotion.
5) Understand what the Chart of Accounts is and how you use it. The Chart of Accounts or COA is the backbone of your accounting system. It is the list of income accounts, expense accounts, assets (things you own) and liabilities (things you owe) and is used to record your transactions in a standard format used by all industries. Knowing which accounts it contains and their relationship to each other helps you understand and correctly record each transaction.
As your business begins to take shape, always remember that keeping your bookkeeping up to date will help keep you stress-free by keeping you from guessing if you are making money.
Want to learn more? Join us for our June Lunch and Learn with Dawn Klevesahl. She will be sharing more about the 5 tips for direct sales business success and be available to answer individual questions and will be introducing her 5-week program Monthly Money Management for Direct Sales Professionals. This event is open to all. You can secure your spot by registering here. http://bit.ly/25z4KB0
Author: Dawn Klevesahl, Stree Free Tax Season or to read more articles like this one, you can visit her blog here.
- 5 Tips for Direct Sales Business Success - June 11, 2016