You’re surfing through Amazon’s expansive marketplace to load up on a few essentials for your small business’ office. You start adding to your shopping cart: new pens, packs of fresh notebooks, and boxes of La Croix for the office kitchen. But then you start loading up on some personal stuff: a new pair of shoes and a big pack of Chemex coffee filters for home.
When you go to check out, what do you do? Do you separate the business supplies and your personal purchases? Or do you put it all on one tab?
No matter what way you look at it, certain things just don’t mix well — specifically your business’ finances and your personal ones. But if you have blended the two on occasion, you’re not alone: According to a survey by Manta and Nav, nearly one in five business owners (17.71 percent) surveyed reported not separating personal and business bookkeeping.
So What’s The Difference Between Business Bookkeeping and Personal Bookkeeping, Anyway?
Business bookkeeping is tracking all of the revenue, expenses, debt, and assets in your business on a daily, weekly, or monthly basis. That information gets turned into financial statements, which lets you make smart business decisions, secure loans, and file your taxes. In short, bookkeeping encompasses everything needed to record your business’ financial activity. Check out this blog post to learn more about what bookkeeping is and exactly what it involves.
Pro tip: You can use small business finance software to make daily tracking of your small business’ expenses easier and more intuitive.
Personal bookkeeping, however, is staying on top of your personal spending and making sure you have the right budget for your lifestyle. Knowing your personal expenses can help you determine your monthly mortgage payments, or it can give you a clear picture of whether you can afford that big beach vacation this year or next. It can also help you assess your personal debt so you can build a plan to get back on top.
Do You Need Personal Bookkeeping Software?
There are a few, free online apps available that use data from your personal bank account to show you how you’re spending your personal money on a monthly basis. The issue with using a free app like this for your business bookkeeping is that they often don’t provide enough information to get the granular details needed for accuracy. They also don’t offer any sort of substantial financial insights for a business as opposed to a person.
Why Your Startup Needs Business Bookkeeping Right Now
It’ll Help You Make Sure Everything Is Paid On Time
Between traveling, keeping the startup moving forward, taking care of your employees, and putting out the daily fires that pop up, there’s a good chance something will get left out along the way. And that often ends up being the bills that need to get paid. Using bookkeeping software will give you confidence that you won’t miss a single payment.
It’ll Give You Peace of Mind That You’re Filing Taxes Correctly
When compared to doing your personal taxes, business taxes are a whole different animal. Different industries have different tax rules. And depending on your business structure, you will have various tax requirements, including estimated tax payments, state-by-state tax rules, corporate tax payments, 1099s for contractors or freelancers, and more. It can be a big, time-consuming mess if you don’t keep detailed books for your business (and you deserve peace of mind come tax season).
It’ll Help You With Your Financial Statements
Financial statements give potential investors a glimpse into how your business is doing. If you’re seeking financial assistance from a bank or investor, they’ll need to see a set of prepared statements that span back to the early days of your business. This gives them the confidence that their investment is the right one, so it’s in your best interest to start bookkeeping early.
It’ll Help You Focus on Growing Your Business
Founders of small businesses have a lot on their plates. Between product and strategy meetings, plus finding the best way to launch a killer marketing campaign, there’s very little time to worry about the daily operational tasks, too. A bookkeeping service can help you focus on the stuff that matters instead of the nitty-gritty numbers.
Ready To Take Control of Your Small Business Finances? Here’s How to Find The Best Form of Business Bookkeeping
Accurate and consistent bookkeeping is vital for a healthy business. Your business can’t thrive or grow without it. But it can also be tedious, confusing, and time-consuming. There’s a reason it often gets buried at the bottom of a to-do list. After all, your time should be spent doing what you love—not tracking numbers.
Solid bookkeeping lays the foundation for every accounting task required of your business, so getting it right is essential. Fortunately, bookkeeping software makes it easy to instantly track and categorize your daily expenses. It’ll also make it easy to separate your personal purchases and the ones for your business to ensure clean, accurate, and healthy books.
ScaleFactor’s daily bookkeeping completes the work for you, so you have more hours in the day to grow your business. Request a demo with ScaleFactor today to learn just how bookkeeping software can help you track your business expenses—without all the hassle.