The Importance Of Accounts

Posted by Paul B | November 19, 2007 .

Boo accounting, nobody really wants to bother doing the books but I’ve got news for you, if you want to take your online career to the ultimate stage (working for yourself) then you’re going to have to understand at least a little bit about where your money comes from, where it goes and perhaps best of all just how much you have left over to buy that Ferrari this month! As blogging and making money online moves from just being a hobby that pays to a full time job you’re going to face some decisions that anybody setting up their own business has to face e.g. self employment as a sole trader or forming a company? In order to make a decision that is best for you you’ll have to have some idea of cash flow, profit and loss and all that other horrible accountancy stuff.

Accountants Are Expensive
Sorry if that seems like a generalisation but it’s true, it’s also one expense that many people making the break from employment to working for yourself could do without out. When I first started making money online professionally it was one of my biggest fears, in order to give the tax man what he wanted I presumed I’d have to pay an accountant and in the process actually put a big dent in my chances of turning a profit and giving myself a wage. It was then that I bought myself a “For Dummies..” book, spent a few days reading up and finally came to the realisation that’s there not actually a whole lot to it. To make life even better there is affordable software out there that can get you up and running at a fraction of the cost of an accountant.

Accountancy Software And Why Use It
I use QuickBooks to record the in’s and out’s of my business activities. It has a great help system to get you started and it’s layout is so intuitive that you’ll only have to do something (like paying a bill) once or twice for it to stick. I was a Sage developer for a few years so I also know how good that is. One of the coolest things about using a propper accountancy package when you’re making money online is that you’ll end up with loads of different sources of income (each affiliate program you join etc), the number of people that try to use spreadsheets to make sense of all this is ridiculous. With a propper program you’ll be able to see what money has come from where and how it’s changed over time. It also helps me because I need pounds sterling to live and yet I earn in dollars. By converting the dollar amounts to sterling and holding the amount I earn in pounds it lets me see exactly what is and isn’t performing. For example it recently became apparent that even though I thought I was earning about £750 ($1500) a month with one affiliate program I could see from my accounts that only £670 was ever hitting my account. A quick e-mail and a change of payment method and I’m now earning much closer to £750, this is something that I wouldn’t spot unless I was keeping accounts in sterling.

By actually taking a little time every week or even every 2 weeks to record what comes in and goes out not only will it make your life easier when you do switch to full time making money online, it will make keeping the tax man happy and even more importantly may even help you save money.

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3 Comments so far

Thomas Sinfield November 19, 2007 2:13 pm

I hate paperwork fullstop. I just put it off all the time. I have to take my stuff to an accountant at the moment to get mine done :S
Paul B November 19, 2007 3:14 pm

I always told myself that when I earn more per hour than the average accountant then that is when I’d start using them! You’re right though, paperwork is the most boring part of any business.
Click for Nick November 19, 2007 7:40 pm

That is right, boo accounting. More especially boo accounting class…

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