Behind the Scenes of My Business Finances
I love a good “behind the scenes”, don’t you? Getting to see how different people do things, how they set up their lives, and get things done. So I thought I’d take you behind the scenes and show you what tools and systems I use for the financial side of my business. Everything from what bank type of bank account I use to how I organize my receipts to how people actually pay me.
So here we go!
First: a “caveat”: This is how I run my business. This is what works for me and how my brain works. It may not work for you! I’ve listed alternatives for most of the tools I use, so definitely look around to see what will work for you, your business, and your brain. Don’t just take my word for it!
A Bird’s Eye View of My Business
Witches and Weirdos is a service and digital-product-based online business. I have three main streams of income:
1:1 Clients
I have a roster of monthly bookkeeping clients, and do bookkeeping clean-up, and 1:1 bookkeeping training for people.
Digital Products
I’ve created a fantastic library of easy-to-understand bookkeeping courses, a simple spreadsheet bookkeeping system and budget templates.
Memberships
Back Pocket Bookkeeper is a low-cost monthly membership to designed for people who aren’t ready to (or simply don’t want to!) hire a monthly bookkeeper, but want a place to come to ask questions, get support, and have some designated “butt-in-chair” time to get their bookkeeping done.
How People Pay Me
For 1:1 clients, the set-up is super simple. Monthly clients are set up on auto-pay using Stripe’s subscription feature. Everyone’s credit cards are automatically charged on the first of the month. I send one-off clients an invoice through Stripe.
Other great options: I love the simplicity of invoicing and billing directly through Stripe, but if you’re looking for something a bit more in-depth, especially if it can be combined with sending contracts, automatic workflows, etc, Dubsado and Honeybook are both great choices!
All my digital products (including the BPB membership) are sold using Thrivecart’s check-out system. While Thrivecart does allow you to connect various payment methods like PayPal, Apple Pay, and others, I stick with only allowing people to pay with credit cards. This means I only have to connect one payment account (Stripe) to Thrivecart. In my mind, the simpler, the better.
Business Checking Account
I use Relay for my business checking account, and I LOVE them. Here’s why:
There’s no minimum balance requirements and not monthly fees
You’re allowed to open multiple checking accounts per company (this is great if you want to implement Profit First for your business)
You can give your bookkeeper or accountant read-only access to your account (as a bookkeeper, I LOVE this feature!)
It syncs beautifully with Quickbooks Online, Xero, and Wave
They also offer savings accounts!
Other great options:
If for whatever reason you don’t want to open an account at Relay, Mercury Bank and Bluevine are also great options.
Credit Cards
I usually advise people to use a credit card, as opposed to a debit card, for business expenses. Why? Because credit cards are better in terms of protection against fraud. If your credit card number is stolen and someone makes a fraudulent charge, it’s easy to call the credit card company and report the charge. They’ll reverse the charge, and you’re not out any money. If someone makes a fraudulent charge using your debit card, the funds will have almost certainly left your account by the time you notice, and it’s a LOT harder to get your money back. So yeah, I’m a fan of credit cards, assuming you know you’re not going to willy-nilly run up a large balance on the card purchasing things you can’t really afford.
I use a Chase Ink Business Unlimited credit card. There’s no annual fee, and I get 1.5% cash back on all purchases. And of course, it syncs beautifully with all popular accounting software.
The only “caveat” is that the card needs to be opened in your business’s name. So if you’re a sole proprietor, this isn’t the card for you.
If you are a sole proprietor, you can designate any personal credit card you’re not using to be your business card. I like the Citibank Double Cash card, since there’s no annual fee, and you get a full 2% back on every purchase.
Bookkeeping/Accounting Software
I use and love Xero, and it’s where my official “IRS approved” bookkeeping lives. Why do I use Xero instead of Quickbooks or Wave? For me, it’s the native integration with Stripe. (As you read above, Stripe is my payment processor choice!) Because of the integration, it’s super easy for me to categorize my different income streams, down to the different courses I sell.
Other great options:
Quickbooks (affiliate link)
YNAB (possibly) (affiliate link)
Not sure which one is a good fit for you? Take the free quiz!
Budgeting Software
As much as I love Xero for official bookkeeping, I live and die by my YNAB account (affiliate link). For me, that’s where the gold is, in terms of tracking my cash flow and making spending/investment decisions. It also lets you have multiple budgets for one subscription so you can have budgets for your personal/household funds in addition to your business!
I’ll be talking a LOT more about YNAB and budgeting very soon, so if you’re interested, stay tuned!
Receipts
Digital/Emailed Receipts:
Soooo…. This is definitely a “do as I say, not as I do” section. *hangs head*
What I SHOULD do: Have carefully organized labels in Gmail where I store all my emailed receipts for business expenses.
What I ACTUALLY do: Rely on the search function of Gmail. And to give myself credit, since I never delete email from Gmail (I simply archive everything), I’ve never not been able to find a receipt. This is what I’m banking on if the IRS ever audits me. (Quick story time: a few months ago I couldn’t remember the brand name of a headband I bought way back when. I wanted to buy another one, and knew I had ordered the original one online, but for the life of me, I couldn’t remember the name or website. I found the order confirmation in an old HOTMAIL email account, dated 2010. All hail the inbox search feature!)
Physical Receipts: I throw them in a file folder with the other paperwork for that year’s taxes. Easy peasy.
Other Great Options (if you want to get fancy): HubDoc (free with a Xero subscription!)
Paying Independent Contractors / Subcontractors
I don’t actually have any subcontractors at the moment, but if I did:
These days, especially in the online business world, independent contractors usually send the business owner an invoice they can pay via credit card. (ex: via PayPal, Dubsado, Honeybook, Quickbooks, etc). That’s how it worked with my previous independent contractor. She sent me an invoice each month via Wave, and I paid it using my credit card. Couldn’t be easier!
If I needed to initiate the payment to the contractor (meaning, they didn’t send me and invoice) and I didn’t have enough contractors to make it worth paying for a payroll system like Gusto, I’d send money via PayPal. But NOT using the “Friends and Family” function of PayPal. Because #termsofservice. (I’m not a stickler on a lot of things, but this is one of them. I’m not entirely sure why! That said, I absolutely will not judge you if you decide to send money to contractors via Friends and Family. I promise!)
My Bookkeeping Process
What I actually do:
Official Xero bookkeeping: once a month. (And that’s only because I need to do it to update my monthly report project. If it wasn’t for that, I’d probably only update my bookkeeping every 2 or three months. Why? (And I say this with all humility): because it’s super easy for me and I just don’t need to go in and do it every month. I’d gain nothing from it, and it doesn’t do any harm to only do it every couple of months.
YNAB, however, is a different story. I’m in there about once a week, if not more. This is because (at the moment at least), my budget is pretty tight, and I very much want to stay on top of things. (Also, I just like seeing all the dollars in their buckets! It makes me happy.) If I had a bit more wiggle room, I probably wouldn’t keep quite so much of an eagle eye on things. (Possibly. See previous comment about dollars in their buckets making me happy! 🤣)
What I recommend people do:
If you’re just getting started with your bookkeeping, I suggest people do their bookkeeping weekly or every other week. This makes sure that each time you go in there, you don’t get overwhelmed (and thus frustrated) by bunches of transactions. Once you get more comfortable (and a little quicker) with bookkeeping, you can go down to monthly, or however often works for you.
The Wrap Up
And that, my friends, is the entire behind-the-scenes tour of my business finance set-up! That was a lot, so thanks for sticking around! If you like this kind of thing, I invite you to subscribe to my newsletter. In addition to regular weekly emails, I also send out a “monthly report project” update, where I give you the BTS details of my business. I include actual revenue numbers, goals, milestones, what worked, and what didn’t. It’s fabulous!
