The mention of the word “bookkeeping” is enough to send shivers down the spine of any online boutique owner.
Even if you’re a math whizz, bookkeeping for your boutique isn’t something you get excited about. In fact, it’s probably something you dread. Nearly 75% of small business owners have little faith in their bookkeeping knowledge. So, you’re not alone.
Don’t stress. Our basic guide to bookkeeping for online boutique owners will give you the know-how you need to confidently manage your finances! Let’s dive in…
Allow us to take the sting out of the anxiety you feel when you hear that dreaded word. Bookkeeping, at its most basic level, is tracking and organizing what your business spends and receives. See, it’s not really that scary, is it?
It gives you a clear picture of money coming and money coming in. Accurate bookkeeping is crucial for you as an online boutique owner. Here’s why…
Before we dive into some tips, let’s take a moment to talk about why bookkeeping is SUPER important…
As a boutique owner, you’re going to have to submit income and sales tax to the IRS. First off, keeping your books in check year-round helps you estimate your tax more accurately. Then, when April arrives, you won’t be scrambling around at the last minute because of a nasty tax surprise.
Are you a big fan of paying too much tax? Rhetorical question – of course not! No one is. Staying organized with your bookkeeping stops you from overpaying on your taxes. If your books are in order, you’ll be able to find and claim back your small business expenses. Don’t let your hard-earned cash slip away by overpaying.
When it comes to bookkeeping, a couple of common mistakes we see from online boutique owners are:
Both are a big no no.
As a boutique owner, you need to know what’s coming in and going out of your business. As accurately as possible. Regardless of your size. If you rely on bank account bookkeeping or don’t have a system in place, you’ll find yourself in major trouble. You could be hit by unexpected expenses (like merchant fees), and you’ll be unprepared for sales and income tax.
Accurate bookkeeping gives you a true view of your boutique’s financial health. It allows you to instantly see where you’re at financially. You can know, with confidence, what money you’ve got and what you owe. And you can start to pick up on trends.
You’ll have invaluable insight into where you’re spending too much or investing too little. Then, you can adjust accordingly. It’ll also enable you to spot where you can potentially outsource. And, as we’ve mentioned in previous posts, outsourcing is great for more family time and less overwhelm.
Plus, this will allow you to set proper budgets for the future and make use of systems like profit first.
Once you know where you stand financially, you can start to plan for the future. Maybe you want your own physical store, or you just want to scale and expand. Solid bookkeeping is the firm foundation from which these dreams can grow and become a reality.
Sure, bookkeeping isn’t the most attractive part of being an online boutique owner. But, as you can see, it’s a critical component to boutique success. Both now and for the future.
As you can see, bookkeeping is one of the cornerstones of your business. But how should you implement it? Here are our 5 top bookkeeping tips for online boutique owners:
This seems fairly common sense. But you’d be surprised at how many boutique owners use their personal accounts for business finances. Using a personal account makes it really difficult to know what’s a business expense and what’s a personal one. As a result, keeping track of your business income and expenses becomes a nightmare.
So, our first tidbit is basic, but important. Open a business account. Keep your business and personal finances separate. As an online boutique owner, this is going to make your bookkeeping a heck of a lot easier.
Our next bit of advice is to choose a bookkeeping system that works for you. There’s a couple of options:
Single-entry bookkeeping – This one is fairly intuitive and easy. All you do is record your transaction as an income or expense. If it’s an income, you add this to your cash balance. If it’s an expense, you deduct it. Simple
Double-entry bookkeeping – This system records each transaction in two accounts as debit and credit. Though it seems a little more complicated, double-entry bookkeeping makes sure everything lines up. Including your income, assets, expenses, and liabilities.
It’s so important that you make sure to record every transaction. No matter how small!
And stay as organized as possible. This means categorizing your expenses. Remember how we talked about being able to spot trends before? Organizing and categorizing your expenses will enable you to see specific areas where you’re over or underspending.
It’s good bookkeeping practice for small online boutique owners to save all of their paperwork. This includes any orders, forms, applications, tax returns, statements, and invoices. As well as any receipts.
And of course, store these in an organized way that’s easy to access. If you need them for an IRS audit, the last thing you want is to be scrambling through a shoebox of disorganized chaos!
Think of a task you just don’t like doing (other than bookkeeping) …
Maybe, it’s doing the dishes. Or it could be cleaning your car. Our guess is that, if you don’t like it, you’ll avoid it at all costs. But then what happens? The dishes pile-up into a mountain of mess. Or the car goes from dusty to full-blown dump. And then, when you do come round to doing it, it’s WAY more difficult and unpleasant.
The same principle applies to bookkeeping. The longer you leave it, the more difficult it is when you come around to it.
So, schedule in some time daily, weekly, monthly, and so on, to stay on top of your books. This prevents you from having to consistently clean up financial mess. And from missing mistakes.
So… how can you actually do your bookkeeping for your online boutique? What tools can you use? The way we see it there 4 options depending on your needs:
If you’re feeling confident, you can do some DIY bookkeeping on Excel. You don’t have to be a tech-wizard to create a simple budgeting spreadsheet.
This is a good option for boutiques that are just starting out. Or, if you want to save money and don’t want to pay for software or an outsourced bookkeeper.
Bookkeeping software is an excellent option for online boutique owners.
This is almost still DIY, but a lot of the hard stuff is automated for you. Although this option will cost a subscription fee, it’s a great option if you want to save time.
Quickbooks is popular amongst small businesses and boutiques.
Of course, this is more of an option if you have the money to spare. However, outsourcing your bookkeeping is an excellent solution to save yourself time and hassle. You may want to think about outsourcing your bookkeeping as your online boutique grows.
Alternatively, you could use a “done for you” software solution like Bench. They offer subscription packages with a bookkeeping professional included. Unlike platforms like Quickbooks, they do all of your bookkeeping for you. Rather than just providing you with the tools.
Again, there’s a cost. But it’s worth it if you have cash to spare and want to focus on other aspects of your business.
Regular bookkeeping is a crucial part of your business as an online boutique owner. It helps you keep a keen eye on your financial health. And it’s a platform from which your small business can grow.
Speaking of small business growth, that’s what we’re all about at Ship.com. We exist to set boutique owners up for success. Yes, we do that through helpful blogs, such as this one. But we also do it through our easy-to-use ShipLive live selling platform.
Live selling has been shown to increase sales by 10x. So, to add more $ the income section of your (now regularly kept) books – we’d like to offer you a 14 DAY FREE TRIAL of the ShipLive platform. The platform integrates live selling with super simple shipping, easy invoicing and quick customer communication tools. So, you can save more money and time. As well, as increasing sales.
Here’s to balanced books and small business growth!