How I Do What I Do: A Look at My Own Money ToolBox

 “It’s kind of pitiful, I know…”

That was my disclaimer before showing my bookkeeper the simple tool I use to stay on top of my bills. It’s totally old school, and I felt a little sheepish about it.

But heck – it works for me, and that’s all that matters!

Managing a small business of any kind means you wear a lot of hats, and track a lot of details. Marketing. Team. Mindset.

And money. Ayiyiyi…..

Sure, making money is fun. But tracking it, understanding it, and working with it is another thing entirely.

And as a heart-centered entrepreneur myself who cares way more about the good work I do with clients than I have EVER cared about money – this has never been my strong suit.

Still, over the years, I’ve learned a few things, and slowly created systems that help. It would have been sooooo nice if I’d had a coach or a mentor to teach me these things in the early years, but I didn’t. I learned by trial and error.

And today, I’m going to share some of what I’ve learned with you. 

I’ve never shared this level of detail before, but I’m hoping it helps. Let me know in the comments below if it does.

MY ACCOUNTS

I have four basic accounts set up at my local credit union. I tried banks, but found that they had way too many extra fees and were hard to manage. My credit union, though, is a dream to work with.

Here’s how I use those four accounts.

  • Business Checking

Every penny of income I earn goes here, first. Cash. Checks. Even if a payment comes by credit card or PayPal, those funds are transferred to this account. That way, I have one central place to track everything I make for the year, all year long. Easy peasy.

  • Business Operations SA

This is a new idea I’m trying out. With each coaching client, there are certain expenses that come as part of my service to them. Because I know what those expenses will be, I need to be careful not to spend that money in advance.

I’ve created a place to ‘set aside’ those funds, so I’ll have them when those bills come due. I call this my Business Operations “Set Aside” account, or “SA” for short.

More sensible people would just call it savings. :)

  • Business Salary SA

Using the same idea, I also ‘set aside” (save) a certain percentage of income to use as my salary fund. More about that in a moment.

  • Business Tax Savings

And finally, I put a certain amount of every dollar earned into a business savings account that I use primarily to pay taxes.

MY FORMULA

As I said, every penny I earn, one way or another, lands first in my Business Checking Account.

From there, I then transfer half of that amount to other places: 15% goes to Business Tax Savings and 35% goes into my Business Salary SA account.

If I have specific business expenses I know I’ll need to cover later, I move that $ to the operations account.

The remaining funds are what I use to pay bills associated with running my business (utilities, cell phone, insurance, coaching fees, team, travel, etc.)

At some point, I’ll change this up a bit and begin implementing the formula Mike Michalowicz talks about in Profit First, but I’m not there yet.

MY NUMBERS

My bookkeeper uses Xero instead of Quickbooks, and everything I need is there. She tracks all of my business income and expenses, categorizes it so that we’ll have it for tax time, and updates the files in Xero on a regular basis.

Sometime around the 10th of the month, I make myself go look at Xero. (It’s on my calendar!)

And when I do, here’s what I’m looking for.

First, I spot check a few entries to make sure she’s cataloguing things the right way. Because my income comes from a variety of sources, it’s easy to make a mistake in how we label those, and no one will see that as quickly as I will.

Second, I run a report that shows a summary of income and expenses for my business, year to date. (This is usually called a P&L, or Profit and Loss report.)

How does it look? About what I’d expect? Better? Worse? Anything there that jumps out at me and might bear a closer look?

Third, I compare this year’s numbers to last, at this same point in time.

So, for example, I can see what I’d made by March 31 last year AND this year. That, too, will give me a sense of how I’m doing over all.

MY PROCESS

Every Friday, a set amount is transferred from my “Business Salary SA” account to my personal checking account. That’s my ‘paycheck’ and is what I live off of. I just have to make sure there’s enough in that Salary account to cover that transfer.

Then, twice a month, I sit down to pay bills, both for my personal life, my coaching/counseling practice, and for the group psychotherapy practice that I manage.

MANY people use a digital spreadsheet or a tool like FreshbooksQuicken, or Money to track and pay their bills with precision and ease. (I’m lookin’ at you, Linda Pucci!) I’ve tried many of those as well.

But in the end, what’s worked best for me is an old-fashioned simplified paper chart that lists all the bills I pay, the amounts and date due, and has a box for each month to check off that they’ve been paid.

That’s the old school tool I was talking about above.

I have a habit of messing up formulas in Excel, and I’m not so good at fixing them. So this is way better for me!

MY MILEAGE

Tracking mileage has saved thousands of dollars off my taxes each year. So finding a way to keep up with it all year long is important.

All I do is keep a small spiral bound notebook in the front seat of my car with a pen attached. And I make sure it’s easy to spot, so I remember to use it. :)

If I’m going to be making a business stop of any kind (buying a pack of pens at the office store, stopping by the bank, meeting a colleague for coffee), I write down the datelocation and starting mileage at that moment.

When I complete the trip, I write down the location and ending mileage. Then I add up the difference and write the total miles traveled with a big circle around it that I can easily see later.

There is a popular app called Mile IQ that automatically tracks your miles every time you get in the car. In some ways, it’s easy to use, but you do have to go in and make sure trips are labeled correctly, and sometimes, it will miss one or two.

So in the end, I’ve found a simple notebook easier. The downside is that I have to add up all those business miles manually at the end of the year. But, because I ONLY write down business miles, it’s not that hard.

YOUR TURN

It’s really easy to make things like this more complicated than it has to be. So as you think this through, give yourself permission to develop tools, systems and processes that fit YOU and your style, no one else.

I have a ton of room for improvement, and I know it. But these things (and a few others that I’ll share with you in another post) are what work for me for now.


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