Day 24: Basics of Bookkeeping
Now that you have a business, there are a few things that you'll need to keep track of for tax purposes. By doing this from the beginning, you'll be so relieved when it's tax time and you have all of your stuff together and ready to go! We recommend taking a few hours every week to keep track of your receipts and log any sales, etc. so that it's not an overwhelming task at the end of the year.
There are two ways that you can do this. You can either track it yourself on a spreadsheet, or purchase something designed for specifically for Brand Ambassadors (Etsy has a ton of options that are reasonable and you can reuse from year to year!)
In any business, there are TWO crucial things that you need to keep track of: Income and Expenses. See our breakdown below of what we recommend you keep track of! It is handy to have two boxes on hand where you can put all documentation that deals with either income or expenses.
Record ALL of your sales and income! This is known as your Gross Receipts or Sales and it's very important that you always report all income you receive. Add up your total personal sales for the year, commission income, incentive awards etc. and then separate how much was collected in sales, tax, shipping & handling, as well as any discounts offered.
Here are some possible streams of income for your business:
Gross Sales: full retail value of products sold
Shipping income: any shipping charged to customers
Discounts: any discounts offered to customers
Commissions: any commissions earned from Red Aspen in the form of a check or direct deposit
Bonus Products: any free products received from Red Aspen® for Dashing Starts or Business Bursts
Other: any other monetary or nonmonetary compensation form Red Aspen®
Keep track of EVERY EXPENSE! If you have questions, ask an accountant and they will be able to tell you if you can write off the expense or not. Below is a list of other possible expenses you may have for your Red Aspen® business:
Products for resale: the cost of products that were purchased to sell
Credit card processing fees: the fees charged by your credit card processor/ payment system
Advertising: anything you did for advertising, either on Facebook, flyers, etc.
Bank Service charges: monthly service fees, overdraft fees
Computer and internet computer supplies, percentage of monthly internet bill used for business
Demo products: products that are kept for testers
Demo supplies: supplies needed to demo products i.e. applicators, cotton pads, anything needed for an event
Education: expenses for education to learn more about company & products. This can include training packages, seminar, etc.
Event Fees: fees paid to participate in vendor events
Freight: shipping paid to get product and supplies to your business
Marketing Materials: materials given out to market your business- business cards, etc
Office Supplies: supplies used at your home office like printer ink, paper
Packaging Supplies: products used to package your products, example: organza bags, stickers, etc.
Postage: shipping paid to get product from your business to your customers
Promotional products: products donated or given away as a promotion
Shipping supplies: anything you use to ship your products, mailers, labels
Taxes: sales taxes paid to purchase products and supplies less any sales taxes recouped from customers
Travel: travel expenses to company events
Misc: anything else that you paid for involving your business!
And finally, always consult a professional accountant with any questions, these are just a
collection of tips & tricks that our team has had success with our business!
-Set up a spreadsheet with two pages - one for income and one for expenses.
-Start tracking all of your current expenses to date (your first order, supplies, etc.)
-Set a reminder in your calendar for one day every week to input sales and expenses to stay on top of accounting.