Using
A Record Keeping System for Your Craft Business
by James Dillehay, author of seven books, is a nationally recognized
expert on how to sell crafts. Courtesy of craftmarketer.com
There is one aspect of being self-employed which seems to be universally
dreaded, recordkeeping. But it's important because keeping good records
shows you how to make a profit selling homemade crafts.
Keeping up with your business records is like homework.
Only the grade may be more important now than it was then.
The grade is whether you have enough money to pay your bills
and feed your family. The key activity is to record and analyze
your expenses and sales on a regular basis.
You should start keeping records from the day you start planning
your crafts business. Begin by gathering all business related
receipts and entering them into a software program like QuickBooks
or Quicken
Home & Business
The important point is to have a system you can follow up with regular
entries. You can then extract meaningful reports from the
information. Since Uncle Sam requires accurate records, you
are legally responsible to do so anyway. And when it comes
time to file your forms, QuickBooks
or Quicken
will give you simple tax ready reports that make it all worth
while.
Should you hire an accountant or C.P.A.?
For most self-employed, the expense of hiring an in-house bookkeeper
or accountant can only be justified when the business becomes so large
that the owner can’t handle it alone anymore.
Whether you hire an accountant or not, you should know basic
bookkeeping skills. You don’t have to have a degree
or even formal training to learn accounting. Programs like
Cashkeeper
Works are simple and designed for small businesses.
When tax time comes, There are programs that offer Multiple States, Free E-file for Federal and State, Secured, Easy, and Reliable.
You can also take a basic
accounting class from your local community college or continuing
education program. Small Business Development Centers or SBDC’s
sometimes offer courses and many provide free counseling.
There are several basic kinds of records you to keep up with. Here
are the ones you are most likely to need. You will find these forms
and more details on how best to use them in The
Basic Guide to Pricing Your Craftwork.:
- Cash Flow Statement
- Profit/Loss Statement
- General Accounting Ledger
- Inventory Log
- Fixed Assets or Depreciation
- Accounts Receivable
- Accounts Payable
- Payroll Log
- Profitability Chart
- Telephone Log
- Mileage, Travel & Entertainment Log
- Weekly Income/Sales Journal
If you haven't already opened a separate checking account for your
business, you should do so. You can easily confuse business and personal
transactions if they are both present in your personal checking account.
When tax time rolls around, you'll be grateful you kept your business
records separate.
A paper recordkeeping system will work well until you reach a point
when increased sales take too much time to record entries by hand. At
this point, using a computer will become more cost effective.
You will know that time is near when you find yourself spending more
time than you can afford to spend looking up records, writing invoices,
or trying to do a cash flow projection or balance report on the financial
state of your company.
Another signal will be when you want to mail new product information
or announcement of a special sale to 200 customers and you have to copy
their names and addresses by hand.
There are many computer software programs to help small business
owners manage their records.
QuickBooks by Intuit is recommended by the Small Business Administration
and the program used by this author. For beginners, QuickBooks Online Simple Start is very easy to setup
and customize for how to make a profit selling homemade crafts.
The above article is copyrighted and excerpted from the book The
Basic Guide to Pricing Your Craftwork. by James Dillehay, member
of the advisory boards to the National Craft Association and ArtisanStreet.com.
Visit craftmarketer.com.
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