First Steps to Financially Savvy Entrepreneurship: Part Three
Aug. 27, 2018
Are you “in sync” with your bank?
If you have a cloud-based accounting platform like QuickBooks Online (QBO), Xero or Zoho, you will always be in sync with your bank and credit cards as they download automatically. Each night around 3 a.m., when financial institutions have finished their postings, banks, credit cards and merchant services such as PayPal push information into your accounting software automatically.
Having a bank that syncs with your bookkeeping system helps streamline tasks, particularly your monthly reconciliations. However, syncing does not replace performing your reconciliations. It’s only a way to minimize your time for data entry. How would you like to wake up in the morning knowing that all of the transactions you did for the day before are all just waiting for your approval? This keeps your bookkeeping up-to-date all the time and eliminates “after-the-fact” bookkeeping.
Here are a few tips for keeping your banking and credit card transactions tidy:
- When you’re a startup, it’s likely that you’re using personal funds to get started. It’s OK to deposit money from your personal account into your business bank account. The money you use from your personal account to create your business accounts is called Owner’s Equity or Owner’s Investments in your Chart of Accounts. This is how you should categorize all future deposits from your personal account.
- Do not pay personal bills from your business account. Do not use a credit card for both personal and business matters. This is called co-mingling and it makes bookkeeping difficult. Cloud-based platforms like QBO will automatically assume these are business expenses and look for a place to put the expense. If you do accidently pay something personal out of your business account, you should put this in Owner’s Draw or Shareholder’s Distribution in your Chart of Accounts.
- QBO has a more sophisticated bank rules feature. It allows you to assign bank rules for transactions when they come through to categorize them properly in your Chart of Accounts. Make sure each transaction is labeled with a vendor (payee). For example – if the credit card downloads a transaction for Verizon wireless, you can make a rule that says to always put this into the cell phone category and to not ask you again. This is what is called “automated entry” as we know that Verizon is always going to be in conjunction with the cell phone category.
Are you surrounding yourself with a great team?
You need to connect with like-minded people who will walk the walk with you, but tell you when you need to start running or start backing up. How do you create a team of advisors? Aside from having a solid bookkeeping platform with helpful customer support, look for: good rapport with your banker, a friend or colleague who will be there to listen to you, a business mentor and a CPA or bookkeeper who is available to assist you and help you stay on track. Find like-minded entrepreneurs to connect with and share information. Your bookkeeper or CPA should be part of your support team to offer advice throughout the year and help you analyze your numbers to improve financial stability.
Finding a mentor or advisor can be a great asset when you need a sounding board or an external, objective third party to think outside the box and advise you in decision making. A mentor can be a paid consultant or a friend who can offer sound advice.
Things to consider when choosing your team:
- Do they have direct experience in your field?
- Will they talk with and work with each other?
- Do they support your mission and purpose?
- Are they there for you when you need them?
- Did you outline expectations and time commitment?
- Do they balance your strengths?
- Detail-oriented or big picture visionary
- Assertive or cautious
- Networking or behind-the-scenes
One member of your team can be the Small Business Administration (SBA). They offer a list of 10 steps to starting a business. Chattanooga’s TSBDC is a great place to get help as your company grows (and it’s free!) Not to mention, Lynn Talbott’s free, monthly “NEWtrepreneur” Bookkeeping Class is an efficient way to get a refresher on ten mistakes to avoid if you’re new to keeping up with your accounts. Check out this link for the next class, on Monday, Sept. 10 at noon. We hope to see you there.
HR Business Solutions, LLC (HR Biz) is an INCubator graduate. Founder and President, Lynn Talbott, MBA, was awarded the TSBDC’s Small Business Person of the Year in 2015. Her success story is featured on the SBA’s website for Tennessee. She and her team of QuickBooks ProAdvisors provide full-charge bookkeeping services as well as QuickBooks training. Need a consult? Call 423.668.6020 or e-mail email@example.com.