One of the biggest mysteries of running your own business is bookkeeping. What does correct bookkeeping even look like? There’s a massive learning curve that comes with bookkeeping, and many freelancers have to tackle it on their own when they start their business. If your books just aren’t as great as they could be, this episode of Freelance Transformation is for you!

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Donna shares with us:

Donna Zanger, owner and founder of Dbooks Bookkeeping, is a certified public accountant in Manhattan. She and her team of 20 CPAs help many business owners like yourself manage their books. She teaches business owners and freelancers how to do their own bookkeeping and keep track of their monthly invoices and expenses. Donna de-mystifies bookkeeping and shares how you can overcome the common mistakes freelancers make so that you can finally stay on track financially.

“Our team is one that I take a lot of pride in the fact that they are easy to talk to. Business owners and individuals find it nice that they have someone that they can chat with about their finances and find that it’s easy to talk with them and easy to understand what’s happening in their business finances.”

What is bookkeeping?

Donna gives the best definition of bookkeeping I’ve ever heard in my years as a business owner. Bookkeeping means you are using a system to track your business transactions and tallying them up based on the type of transactions they are, whether they are income or expenses. This can be done with software as simple as Microsoft Excel or apps like Harpoon. As a freelancer, you just want a way to stay organized and on track with the amount of money you are earning and spending per month.

“If you wait to do it at the end of the year, you really have no time to adjust or make changes that could make your business more successful.”

Donna recommends managing your books every month. When you do, you can create a dashboard that shows you exactly how well your business is performing month-to-month. You want to update your records as soon as money comes in, or at least within 30 days so you can easily recall who paid what and make note of when and where you can make improvements that will expand the success of your business.

“As you start with that basic practice, you can start to look further into the future…and hire someone else or expand your office.”

The most common accounting mistakes freelancers make:

“The first common mistake I see new business owners make is they put the tracking of their finances at the bottom of the list.”

Donna is so adamant about managing books on a monthly basis because she and her team see so many business owners who don’t have a regular schedule for bookkeeping. If you aren’t keeping track of your numbers, how do you really know the net profit of your business? And how do you know if you’re getting most back from your tax deductions? Avoid this common mistake by making bookkeeping a priority.

“I see a lot of businesses get started without it, and then suddenly at tax time or when it’s time to apply for a loan…there is nothing to present.”

Maybe running the numbers doesn’t satisfy you as much as running your business does. Or maybe you are too busy training your team or designing your products to really sit down and take a look at your books. But you have to remember that bookkeeping IS your business. You aren’t doing it for the government or for the IRS, you’re doing it for you!

“It’s so nice to be able to look at your profit and loss by month… and run a report that shows you the trends.”

Donna breaks down the biggest components of bookkeeping, including invoices, expenses, and tax deductions, and gives advice on how to stay on top of all of them. There are tips for encouraging your clients to pay on time so you can meet all your expense deadlines. And there are all sorts of tax deductions you could be missing out on simply because you aren’t managing your books as well as you could be. If you want to see how successful your business can really be, start bookkeeping every 30 days so you can recognize the trends and patterns that spell success.

The best time to hire a CPA:

The best way to avoid the common bookkeeping mistakes freelancers make is to hire a CPA. If you know from the beginning that bookkeeping isn’t your favorite, you can benefit from hiring an accountant right away. It’s not as expensive as you think, and it will establish an amazingly strong financial foundation that makes you confident in your business. But if you’re more of the hands-on type of freelancer, you can always do it yourself.

“I do recommend that if it is something you can do by yourself, get some training and learn how to use it properly.”

People like Donna at Dbooks Bookkeeping are available to train all sorts of business owners looking to understand the complicated world of bookkeeping and accounting. It won’t hurt to invest a little time and money in learning the necessary bookkeeping skills to be successful. You can visit Donna’s team online and enroll in training courses or search locally for a consultation with a CPA in your neighborhood.

Resources mentioned:

• QuickBooks
• FreshBooks
• Harpoon

Find Donna online:

• Dbooks Bookkeeping