01 Jun Make your bookkeeping easier in 3 steps
When starting a new business, sole traders tend to fall into the trap of using their personal bank account to receive payments from clients, and use their debit card to pay for business expenses. The problem is your business and personal transactions get mixed together, making it one hundred times more difficult to keep up on your books. OR more expensive to outsource to a bookkeeper because they have to deal with the mess.
The solution? Separate your business and personal expenses! Here’s how to make your bookkeeping easier (for free!) in 3 steps.
Step 1 Open and online saver account with your bank. Usually they will have a free option, and it may even earn higher interest than your transactional account. If they don’t have something for you, then I’m sure one of their competitors will.
Step 2 Only give your new online savings account to your clients, put it on your invoices, use it for your merchant facilities, and update any payment gateways like Stripe, Square, and Paypal. You will also need to let your current clients know you have new bank details, but make sure you do so safely! Emails can be hacked and go unnoticed so don’t just send the new details over straight away. Instead send a personal email or text message to alert your clients to expect new bank details on the next invoice/statement. Use your accounting package to highlight the details on your invoice so they’re easy to find.
Step 3 Any time you use your transactional account or debit card to pay for a business expense, reimburse yourself immediately. Simply transfer the exact amount from your online savings to the transactional account. Make sure to use a good description on the transaction so it is easily recognisable later. Tip: You can even set up automated transfers for regular expenses like subscriptions, phone, and internet bills. Then you won’t have to think about it at all.
That’s it! You’ve made your bookkeeping SO much easier by separating business and personal expenses in just a few steps.
If you’ve enjoyed this quick business hack, then good news! I’ve got plenty more for you. Come and join us in The Business Club and up-level your business savvy today.
Lauren is a business educator, host of The Brunch Club events, and founder of Empower House.