Keep a Money Journal
Different from your spreadsheet tracker, a money journal is where you track your assets. Did you receive investment money from a spouse, family member, or small business administration? Log the cash investment as an asset.
Fixed assets are those things that are used to generate income for the business over the long term, such as laptops, office furniture, computer software, printers, etc. Take note of all those components you use every day for work and how much you spent on each. Also, take note every time you make a repair to an asset or if you have discarded an asset.
NOTE: Inventory does NOT count as a fixed asset, so if you self-publish a book or signature program, log those expenses on your tracking spreadsheet, not in your asset money journal.
How much have you invested in your company? Many solo business owners have no idea; they just check their bank balance before making a purchase and don’t account for the purchase or know where that money is coming from. Working this way is detrimental to your overall earning potential because you are likely not buying necessary items and you may be focused on all the extras that are not important to your overall monetary goals.
Do you have any outstanding loans or debts related to your business? Those should be listed under your expenses as they need to be paid back on a monthly basis.
In general, business owners who run their companies out of their homes have very little overhead and assets to report but it’s still important to take note and know how much money you spent on each asset. Most importantly, incorrect reporting to the CRA can be punishable with hefty fines, so consult with an accountant or a bookkeeper to make sure your files are in order and the records are accurate.
How To Break Old Habits
First, make a conscious decision that you will take firm control of your business finances and implement an accounting process every month. Invoice weekly or monthly and make careful note of those incoming payments. Spend a few minutes each morning to make a note of your cash balances, your debt, and your accounts receivable (aka outstanding invoices). The more you pay attention, the more comfortable you will become with money – and the more open you will be to receiving it.
Being a business owner, there are always ebbs and flows, where the business is booming for a while and then it tapers off for a few weeks or months before it booms again. Knowing exactly where your money is coming from and how many expenses you have each month will help you prepare for those stark months because financial knowledge equals financial power.
Consider using a journal to write down the money fears that you conquered and use those posts as inspiration for months to come. Empower yourself!