Make bookkeeping less burdensome through TCommerce.
The primary aspect to being a business owner is learning how to properly keep track of your finances. When you've got your head around on your finances, it will help you remain organized and are able to make more informed, effective decisions to run your business.
This blog entry has been made available through Veronica Wasek. Veronica is an experienced expert on accounting as well as bookkeeping. She's certified as an Advanced QuickBooks ProAdvisor, and is she is also the creator of the 5-Minute bookkeeping.
What is bookkeeping ? And the reason I should understand it?
Let's start at the beginning--bookkeeping is the process of recording your financial transactions, like income, expenses, and profits. This is a record of all money that moves in and out of your company.
There are three primary reasons you should maintain a record of your accounts to ensure your accounts are in order, to understand the state of your company and to keep your tax obligations under control.
Check that your accounts are in order
First thing you should do is ensure that your financial statements are up to date that is, there's not any errors, duplications or misclassifications of your transactions. It is crucial to make sure that you don't lose money or paying taxes too high.
One of the most effective ways to ensure accuracy is reconciling your income against the "source of truth" which is your business's checking account with the bank and credit card statement in order to see whether everything is in line. If, for instance, the course's revenue was 500 in the last 30 days and you've only $400 in your banking account, you have an error in the amount of $100 you must investigate. Common reasons behind the discrepancy could be due to student refunds or chargebacks. The aim of investigating the problem is to confirm that all information has been correctly recorded and you aren't missing any cash.
TCommerce provides an easier means of reconciling your books!
Visit your Dashboard to download your Payouts reports and Order Transactions Report with a single click. This Report on Order Transactions Report provides you with each of the student's individual payouts which were made within a specific date. The Payments Report is like an account statement of a financial institution, which records each payout that was successfully deposited into your bank accounts within a specified date. It is possible to compare the two reports while reconciling your financials.
A new feature that is coming will be Quickbooks Online integration with . This will enable you to automatically import your sales, fees and refunds into Quickbooks.
Access your Payouts Report by heading to Market & Sell > Payouts within your administrator dashboard. Pick the appropriate date range, then click "export CSV."
Access your Order Transactions report by going to Market & Sell > Orders on your admin dashboard.
Understanding business health
You can use the financial statements to ensure that your business is healthy growing in a consistent manner. They can help to determine whether you're in a position to cover your expenses as well as if you have sufficient liquidity in your bank should problems arise.
In order to understand the state of your company it is important to constantly be aware of four main indicators: profit, expenses as well as the tax on income and cash flow.
- Costs is the sum you use for the running of your business (marketing and camera equipment)
- Profit - Profit equals income less expenses. This is how much you earn at back to the home.
- Income tax is what you pay in a yearly basis. It is necessary to put the money aside for tax on your income.
- Cash flow Cash flow - money in the bank to cover future expenses
Profits and costs are two of the most important indicators you should be monitoring, as you need to be sure your business is successful or is on its way to profitability. If you're always paying more than what you make (beyond your initial expenses for starting) it is something you should be aware of.
"A enterprise may earn a profit however it could fail when it's not able to cover upcoming expenses and taxation on earnings. It's crucial to keep track of the cash flow in order to ensure we are able to fund future expenses or pay ourselves as well as employees or contractors."
- Veronica Wasek
Veronica says that a sound company isn't just one that's financially successful, but one that is stable in its money flow that is that is set aside to be used when problems arise, and to cover tax on income. So you must know all four measures to gain a precise and complete knowledge of how your business is doing.
In the midst of the essential metrics however, there are additional Key Performance Indicators which should be tracked in order to understand exactly what's going on with your business. Iffor example, there were fewer sales in the last month, you'll need to know why. In other words, did you have less order bumps? Are your affiliate programs not performing as well? This is an essential inquiry you must ask your self every week or on a every month basis to pinpoint the source of the issue and determine how to address these issues.
Some examples of KPIs to monitor include:
- Course in Sales
- Coupon codes to sell
- For sale Order Bumps
- Affiliate sales and any other sales made by affiliates.
Compliance with tax obligations
Another reason to do bookkeeping is for compliance purposes. Financial reports are essential for preparing income tax returns and sales tax statements so you can complete tax fillings. We don't provide a comprehensive discussion regarding taxation in this piece (that's an entire article!) It's essential that people who make a certain amount of money pay tax on the sale of their goods.
Sales Tax is a tricky matter because it's contingent upon where your company is located as well as where your students reside. If your business is based in Canada you will be affected by an income tax that is different than someone who is located in the USA. If the student's home is in California and is a resident of California, they must pay taxes that differ to those in Texas. It's a bit confusing that's why most creators that process enough sales opt to work with an accountant outside of the company. One of the most important lessons for artists is that as you grow the amount of money you earn, you'll need to keep track of the location of your clients and put aside the necessary time to determine accurately the tax due.
are developing exciting software to help you meet the tax requirements of your business. The firm is now able to gather information about your location at the time when you check out and determine your tax obligation using the Transactions Report. This report will include enriched transactions data for transactions, including students' location, so that you can accurately track the tax burden for any specific region. If the report has been made accessible and you wish to have access, simply select the Transactions tab within Market & Sell in your administrator dashboard to open the report.
An appropriate bookkeeping method and good practice
Once you've understood the purpose of bookkeeping as well as why it's vital and necessary, let's explore the best practices and ideas to start practicing to ensure a seamless bookkeeping.
Veronica's 5 Step Monthly bookkeeping procedure
Set aside at minimum 1 hour per month to dig into your library. It will ensure that you're doing the right thing and also that you don't forget the most important work. Take these steps:
- Note that all financial transactions
- Consolidate operations to corporate bank accounts as well as credit card accounts.
- Verify what your transactions were classified as.
- Changes to HTML0 and alter as needed
- Restrict and prohibit any modification to the books once they have been finished
Think about the application of Accounting software
The monitoring of your earnings and expenses is an essential aspect of the accounting. If you're processing a large amount of sales, it is possible to benefit from accounting software. Most popular software for accounting are Zero, Wave Accounting or QuickBooks Online. The project is currently in the process of an integration with QuickBooks Online with Payments. Through this integration, all of your payments as well as reports will be automatically incorporated into Quickbooks.
A few additional tips for bookkeeping to incorporate into your daily routine
- Separate personal and business banking credit card accounts are distinct from personal account
- Scheduling your time on your calendar for working on your books
- streamlines the bookkeeping process with TCommerce and its payment processor integrated
"I can't tell you how much easier our bookkeeping has become when we managed our own academy after we started with payments! We used Stripe as well as installments that required some time to process using Stripe. It's easy to put the job !"
- Veronica Wasek
Make use of TCommerce to make the bookkeeping process easy
- Check your account for your payment, Orders and Transactions reports
- Taxes can be accurately charged by collecting location information of the pupil at the time of checkout.
- Integrate to Quickbooks to ensure your pay check will automatically be deposited in Quickbooks on a daily basis.
Do you need help the set-up? Check out the Help Centre article.
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