Friday, April 3, 2015

Make artWORK: You and Your Books, Part 1

Part 1, By Clay Schudel

Understanding your financial situation – what you have, where it comes from, what you really spend it on and when you need to spend it – gives you much more control over your life. It gives you more control over creating the work you love. It lets you make smarter choices. Understanding your finances lets you plan bigger projects, and avoid the stress of not being sure if you’re on the right track or of being caught by surprise by something you could have seen coming.

You may already have a great accountant (or you may BE a great accountant; I have seen some amazing financial records from some member artists at The Field!) but if not, there’s no time like the present to take a fresh look at your bookkeeping system.

There are some great accounting software packages out there that can help people with very little accounting training keep an impressive and accurate set of books; while you may think of a complicated software systems as "real" bookkeeping, any process that involves the recording of financial transactions is a bookkeeping process. You don’t need any special tools to keep good financial records. Until 30 years ago, almost every system relied on paper, pens and ledger books! But there are a lot of tools now that can make bookkeeping much simpler.

By definition, bookkeeping is “the recording of financial transactions, including purchases, sales, receipts and payments”, so at the most basic level, we’re talking about keeping clear records of your income and bills, all in one place, and understanding your bottom line. Having an accurate sense of how your money flows in and out, over a period of time, will help you plan in every way, from putting together a long term budget for a business plan, to strategizing a fundraising plan for a one-time performance.

The program that I still rely on MOST OF ALL is one that almost everyone already has if they have a home computer – the old fashioned spreadsheet. If you’re comfortable at all working with spreadsheets, Excel (Microsoft) or Calc (Open Office, and free) are extremely flexible programs that you can use to set up any kind of budget, cash flow forecasts and other planning tools, checkbook registers or really anything to do with numbers. The web is FULL of free tutorials on how to get the most out of Excel, sample templates you can download and tips about using spreadsheets in general. Google is your friend!

QuickBooks is a great software package with a not-too-steep learning curve but it’s sophisticated enough for most small businesses. The QuickBooks Pro desktop package costs about $250.
QuickBooks also has a cloud-based online product that costs about $10/month.

I have heard good things about Zoho, another cloud-based accounting program (but have not used it myself).

Another cloud-based personal budgeting app that has been recommended to us is “You Need A Budget” ($60 one-time fee for download)

No matter how well you understand your business figures, unless your finances are extremely simple and you’re filing a basic non-itemized tax form, it’s a good idea to find a professional accountant to look over your books once a year (or quarterly if necessary) and to prepare your taxes. A good accountant will almost always be able to help you find deductible expenses that you may not have thought of yourself, and she may be aware of changes in the tax code that can make a big difference.

April 15th is just around the corner, so grab life by the horns and good luck!

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