How to Set Up Your Books as a New Business Owner

Starting your own business is exciting until you realize you're also now your own accountant. And for a lot of business owners, the biggest question is how the heck do I even set up my books? I want you to know I've been there. I was a small business owner years ago and started from scratch just like many of you and had to figure out how to do my books right out of the gate. But I've also worked with first time freelancers and side hustles and brand new LLCs and people who built six figure businesses before ever touching a spreadsheet. And let me tell you, the earlier you set up your books the right way, learn some of these principles, the easier everything becomes. Taxes, strategy, even just knowing if you're making money. Now I've helped thousands of business owners clean up their books after the fact and thousands of business owners set it up the first time correctly. And trust me, you don't want to be the person sorting through crumpled receipts and Venmo and Apple pay screenshots a year from now. So in this video, I'm going to walk you through how to set up your books from day one the right way, step by step, we're going to cover what to do right now, today to start tracking income and expenses before you tackle anything further. Next, what type of accounting software you're going to have to get because this is not just going to work on Excel. That's why separate bank accounts are a must if you want to save taxes, have clean books and and avoid an audit. And most importantly, how to create a simple, repeatable bookkeeping routine that keeps your finances up to date without taking over your life and driving you crazy. Bottom line, by the end of this video, you'll have a solid foundation to track your income and expenses and thereby make better business decisions. And most importantly, eliminate the stress of having to constantly worry about your bookkeeping. Let's get started. Number one, I don't want you to have stress over this topic. Stress about bookkeeping. And what's interesting is a lot of times when have a feeling like stress, it's coming from a thought, maybe like I'm not good with math, I'm not good with accounting. I've never done this before. I'm going to lose money. In fact, I'm going to be a terrible business owner because I don't understand bookkeeping. Those thoughts create stress. And so the first thing I want to ask you is to start adopting maybe a few new mindsets, a few new ways of thinking about bookkeeping. Like accounting isn't that hard, I'll be able to figure this out. Or I know that as I get to understanding more about bookkeeping, it's going to make me even more successful as a business owner. Or if I need help with my bookkeeping, I know I'll be able to find the resources to help me get it done affordably. Now, I know that may have sound a little interesting here at the beginning of this session on how to do better bookkeeping, but it starts up here. I need you believing that you're going to get this handled. Yeah. Do you know all the bookkeeping rules right now? Are you great at bookkeeping? Probably not. But when you say to yourself, I got this, I'm going to figure it out, I can get help if I need it, that can reduce your stress. And when your stress is lower and you have good thoughts about this, now you're going to tackle it and you're going to take this on without worrying about it. Bookkeeping is about tracking things. And if you want to be rich someday, if you want this to be successful, you want to track those dollars and cents. I've never met a business owner that didn't figure this out. You can do it, too. Number two, what can you do right now? And there are things I need you to do right now. Let's not worry about, oh, I don't have QuickBooks yet. Oh, I don't have the right accounting software. I'll start doing bookkeeping when I have everything dialed in. Uh, I need you to start right now. Now, the easiest way to do this is with Excel spreadsheets. Whether it's a Google sheet that you're going to share with an accountant down the road, or you just do a basic desktop Excel format. Get a spreadsheet out, and I would love to challenge you tonight. This is easy to do. Put on a movie you've seen a thousand times and get a big old Diet Coke and sit down and write down all the expenses on this little spreadsheet as best you can estimate, even if you don't. I don't care about receipts. In fact, let me just tell you, receipts are not bookkeeping. That's what the IRS auditor wants to know, is what you spend. That's what receipts are for. But receipts are not bookkeeping. So on this spreadsheet, we need to start just tracking things. Remember, we're not going to do any math. Just write down on this spreadsheet startup costs or what expenses have you incurred this year. Maybe you've been in business for a couple years and you're just finally tackling this. Thank you for being here, I'm proud of you. But if you don't write them down, we could lose them. And I want you to have that tax write off. So you're not doing anything wrong. You're not being crazy. In fact, you're being very careful and smart and wise. So let's say you're in April right now, the first three to four months of the year. You didn't track anything. Okay, well, let's go back and track it now. Go look at Apple Pay, Venmo Zelle your personal bank account, your credit card, your Amex, your Capital one, whatever. Just start pulling those up and copy pasting them or typing up all the things you paid for this last three or four months that were business related. Guys, that's bookkeeping. So when an accountant maybe like me or someone else at the end of the year says, hey, let's write off all your expenses, you'll go, hey, I don't have the best accounting software. They're going to go, that's cool. Do you have anything written down of at least of your expenses? Yeah, I've got this great spreadsheet. Perfect. You know, have a column for where you spent it, a column on what it was, and a column for the amount. That's it. It's all good. Next we're going to write down all of your income. What's come in, the last little bit. So maybe open a new sheet on that spreadsheet and put income. And then I want you to put down all your income. I don't care if you're going to get a 1099. Who gave you money? Did they give it to you in cash? Did they give it to you on Venmo PayPal, Apple Pay, Zelle, whatever. Here, have a column including the date and probably include that date over there on those expenses too. But have this date and then who paid you and how much? That's it. Number three, I want you to open a business bank account. Now here's why that process of just writing everything down in Excel was kind of messy, right? You're pulling money, you're pulling expenses from everywhere, you're writing down income from everywhere. What we want to work towards is being strict with ourselves and trying to use a business bank account for all of our deposits of income and our expenses. Now when you do that, you're going to go down to the bank and they're going to say, hey, where's your LLC or your corporation? You're going to go in with your articles of incorporation, your ein, or if you have an llc, it's called Articles of organization. You'll have this electronic identification number. Maybe you have the bylaws or minutes and all those things. That's something we do at our law firm, helping clients every day. We literally have a bank packet. We email it to you, you print it out, take it to the bank, they will love you. Get down to the bank and open up this business bank account. And let me forewarn you do not get their sexy expensive corporate bank account with the big fat checks. Just walk in and go, I'm a small business owner. I need a simple small business bank account. I need some simple cheap checks. I want a debit card. Go. And then I want you to start using that bank account as much as you can. Separate accounting. You're going to let your personal account pay for your personal stuff and your business account pay for business stuff. Now don't stress out. I already know what some of you are saying. You're like, well, Mark, how am I going to pay for rent or groceries? You're going to just transfer money from your business account to your personal account. Well, what if my business account doesn't have enough money to pay for my cell phone? Then you're going to transfer personal account money into your business account and let the business account pay for it. Now again, why am I doing this? First and foremost, it keeps all the expenses organized so that I can track them more easily. All the expenses that are personal, I don't get a write off for those anyway. So just over here, the next thing is, if you get audited with the irs, it protects you because you've kept things simple and organized. It saves you so much time. And you know what, for asset protection, if there's an accident and you get sued, you've showed the court, you've showed the law that I'm treating my business separate from my personal. You actually have better asset protection when you have separate accounting number four. Select the right accounting software. Now I'm going to make this easy for you. I wish I got a commission for this. QuickBooks. I'm over here. Send me a check. That's right, we're going to use QuickBooks. Don't screw around with anything else unless someone's going to sit there and help you through it. Because I'll tell you right now, QuickBooks rocks. The real question is, which version of QuickBooks do you use? So I want to give you a couple recommendations. Now as you go into this process, it's important to know why you're choosing to use accounting software. We don't want to be in the Excel spreadsheet we talked about in step two forever. In fact, we only want to be there for a short while. So as you bring on bank accounts and credit cards and online payment systems, all of that stuff will drop right into QuickBooks. QuickBooks will allow you to set up a chart of accounts, which is a way to categorize everything. It's going to allow you to do cool reports. Was I profitable last month? Was my break even for cash flow? Oh my gosh. If you want to geek out, you're going to start to make me hot and bothered. I mean, start playing around in QuickBooks. It is so fun. And you know what wealthy business owners love to do? They love to look at their books. It tells a story, it tells them how they're doing. It helps them make better decisions. So QuickBooks is really about organizing all of that bookkeeping that you were doing back in Excel. And so as you make money and spend money, QuickBooks brings it together and delivers it to you on a silver platter that you can understand. Now, for the version of QuickBooks I'm going to recommend to all of you, just starting out, little side hustle, side gig. Maybe you've been in business for a while. Just go with the online version. The QuickBooks Online version is really easy to use. It's going to expose you to QuickBooks. It really keeps it simple. And you're not going to have to start learning about chart of accounts or credits and debits or T accounts, all these like technical accounting terms. QuickBooks makes it easy. With the QuickBooks online version, you can also access it on an iPad, your laptop at home, on your freaking phone. It's got payment systems for merchant accounts services. It's got ways to create invoices to send your clients. You will love it. Number five, the routine or the system? Now I'll just give you a few examples of good habits with this. For years when I was doing my own bookkeeping. Now I have to say humbly, I've got several big companies now and a few number of employees. And I have a particular person, I won't mention her name, that does all my personal bookkeeping. She's phenomenal and I rely on her so much. But every bank statement, every credit card statement goes to her and she's doing this for me now. And in your business, you'll get there someday. But people, you can't delegate something you don't understand. And Then you can delegate it later. That may be part of the system or the routine you'll implement down the road, but for now, it's you. And when I was doing this, I dedicated one day, one afternoon, one evening a week to where I would just input all my books over the years of technology. I'm a little older than some of you. This started out by typing in actual transactions to where I could download certain things to. Nowadays, a lot of times it's real time. It'll just drop into QuickBooks for you. And all you're doing is cleaning it up. You're just going in and verifying what did Venmo drop in, what did my Wells Fargo drop in, what did my Amex drop in? So you're going to go in once a week at a dedicated time and just do your books. You're just going to kind of look at them. What's off? What's wrong? Is everything there? And by the way, let me tell you, I just got chills. You know what's cool? When you start doing this once a week and you start looking at it, you're going to find yourself lingering in there. You're going to go, hey, how much money did I make this month? And you do a report and you go, what? I should have made more? I'm going to zoom in on that expense report. QuickBooks is that ability to be a real business owner, a real business manager. And I don't care what day, the week or time of the day it is, just dedicate a couple hours once a week to work on your business, not in it, but to work on it, to look inside your business, look at where all the money's coming from and where it's going. And every week you do that, you're going to get better and better at QuickBooks, but better and better at management of your business. We just got to do it. And it's. It's going to actually be exciting. It's going to unlock your real skills to be a successful business owner. Thanks for watching. And as I said earlier, getting your books in order is one of the most important things you can do as a business owner. And the fact that you're here learning now to do it, it's a perfect smart move. Now, on this journey, I know you're going to need some expert help. And for many of you is just getting your entity, that LLC or corporation you formed cleaned up, getting it dialed in, maybe meeting with a lawyer, a tax lawyer that can help give you that roadmap of where you're going to go with this? Well, my law firm, KQS Lawyers, we're experts at this. We've been helping Main street business owners for 20 years. We're affordable. We can get on a zoom call with any client in any state across the country. And we can help you get your books on track by building a trifecta and getting you organized with your entity so that you are fully dialed in to scale and grow and be successful at what you know best. Check out the link below to KQS Lawyers, where you could book an appointment with one of our tax lawyers right now. And if you found this video helpful, don't forget to hit the like subscribe and turn on notifications so you don't miss any future content that'll help you and your business grow the smart way. I'll see you on the next one.