Now that you have a separate bank account for your health & wellness business, you can begin keeping the books. It will make taxes easier and help you understand your profits and losses.
Here are some of the things you’ll need to do for basic bookkeeping.
- Document your transactions. You can be old school and use paper, or you can use a computer spreadsheet or a software program like Quicken or QuickBooks to document and categorize your transactions. You’ll have expense categories like advertising, supplies, rent, utilities, insurance, and professional services (attorney, accountant), among other things. Software programs sync up with your business bank account and allow you to categorize each transaction on your computer or an app on your smartphone. There is an annual or monthly fee for these programs.
- Set aside time regularly to do your bookkeeping. At least on a monthly basis you’ll want to review your transactions and reconcile your bank account.
- Keep your receipts for business expenses. You need to keep a record of all your expenses for tax purposes. You can keep a file or use a bookkeeping app to photograph them.
- Pay yourself like you’re an employee. If you worked for someone else you’d receive a regular paycheck, whether it’s weekly, bi-weekly, or monthly. Set up a payment schedule for yourself in the same way. For instance, you might take a draw from your business twice a month as your paycheck.
- Don’t forget taxes! Because you’re self-employed, you’ll be paying both the employer’s and employee’s share of taxes. Keep in mind that while you may be able to take a tax deduction for your expenses, you still have to pay tax on your income. Small businesses are expected to pay estimated taxes on a quarterly basis, but if you’re unable to do that, you’ll owe a lump sum come Tax Day. Your accountant can advise you for your specific situation.
- Figure out your profits and losses each month. Total up how much you earned each month, then subtract your expenses. If you made money, that’s your profit. It can take small businesses up to three years to be profitable, so you may be seeing more red (losses) on your profit and loss statement until then.
If you categorize your expenses as you go, whether through a software program or on paper, it will save you time later. When it’s tax time all of your income and expenses will already be categorized, making the whole process much simpler. Time management is a large part of owning your own business, so be sure to set aside time regularly to keep up your bookkeeping.
If you have any questions about your health & wellness business, don’t hesitate to contact me at email@example.com.