Keeping track of how much you spend and earn while working from home can feel daunting and/or stressful. These experts share their tips and strategies on making this part of your work-life much easier. If you’re an experienced WAH professional and have some tips of your own, please share!
Here are my top 3 bookkeeping tips for WAH businesses:
Keep your personal and professional expenses separate: When I started my WAH business, I had three credit cards and I would use it randomly for all kinds of purchases. While this worked well for the entire year, it was difficult to prepare tax returns at the end of the year. I would have to go through the credit card statement for each month for each
of my cards. Keeping the expenses separate helps in being more organized and saves a lot of time.
Use cloud-based bookkeeping tools: There are many good cloud-based bookkeeping tools available now. I use *Freshbooks* for invoicing my clients. It also connects with my credit card so I have a clear idea of where I am incurring my expenses. I can also categorize my expenses, which is a great help while filing taxes.
Perform a quick audit every 3 months: It’s a good practice to perform a quick audit every 3 months. This helps in streamlining the expenses and in identifying those expenses that can be avoided. Another major benefit of this audit is that it indicates any major expense in the coming days. For example, in my work, major expenses are renewals of annual subscriptions of tools, hosting, domain, etc. This quick audit ensures that I am not in for a surprise and have enough cash in hand.
Decent accountancy software is a must for even the smallest business. I use QuickBooks Online for this, which turns things like sending out invoices into ten-second tasks instead of long battles with Word and Excel. That said, there’s a place for Excel, which for me involves producing monthly cash flow projections that take into account both business and personal cash flow. Doing this would be my most important tip for any home workers and freelancers – as it shows you what’s actually happening, and can take into account things like anticipating late payments. Accountancy software alone cannot do this!
Note from Leslie
I’m going to be honest…I hate dealing with money matters, but it’s crucial to work-at-home success. I agree with our experts that it’s easier (and the IRS prefers it) if you keep your business banking and personal money separate. Some sort of accounting software or cloud-based service can help you deal with invoices, categorizing expenses and income, and even provide tips to money management. Of course, hiring help is a good idea too, but make sure you review your financials so you know how your home business venture is doing.