Wait - We Don't Meet in Person???
How do people with an online business work together with a bookkeeper and accountant when they aren’t in person? Often with new clients when we first start talking and they wonder "Oh, how do we even do this?"
Typically in the past, at tax time, one would take their paperwork to their accountant or their bookkeeper and show up with a bunch of paper. It’s then organized and processed. They get their pile of paper back AND additional paper for their tax returns.
What happens when you're not getting paper anymore? What happens if all of your receipts, income, invoices etc. are digital? How do you track money going in and out? What about credit card expenses? Without backup documentation for those transactions, if you get audited, your claims may be denied.
These days, it's instantaneous online. It could be through PayPal or automated through your business bank account. Complicated by the fact that what lands in your bank account isn't actually what you've made: it's what you've made minus the items deducted from it.
How do you manage and track all these sources of income in your online business?
If you cannot explain where money comes from and it’s detail, even for example if it's a $10,000 gift from a grandmother, the government will make you claim it as business income.
This is where a bookkeeping guru like me that specializes in the online business space comes into play. This is where I love to play and so does my team! It's like putting puzzle pieces together because everybody's system is a little bit different.
Automation is your best friend
Even more exciting, is that so much of it is able to be automated now because it is all online. We can create and implement systems for business owners and have them all integrated.
This allows you to actually do the bulk of the work yourself. It really isn't anything more than clicking buttons, matching things or scanning with your phone. Then you're not paying for this huge complicated service. You're not throwing a bunch of paper in a box and never quite knowing where you stand.
Sales Process For an Online Businesses
You might have a online business that provides coaching services, digital products or maybe you're an ecommerce seller. Regardless, there is a 3 step process to your business income flow.
It's tracking these steps to ensure that the actual sale is recorded properly from beginning to end. Remember, by the time it gets to your bank account, it's minus fees. These fees also need to be tracked. Some software will provide you with accurate reporting. For example, Infusionsoft is a fairly robust system and there are others that do the same.
If you're Canadian like I am and a lot of my clients, it's even more difficult because you're charging largely in US dollars and that money that ends up in your bank account is in Canadian dollars.
Exchange Rates & Currency Issues - They're a big deal
Staying on top of of converting at the applicable exchange rate on a regular basis is so important. Otherwise you're at the mercy of whatever the annual exchange rate is for the year. This is because you have to convert any US income into Canadian dollars for your taxes and you might end up paying significantly more in taxes if there is a gap in disparity. If you're doing it as each sale goes on, it saves so much time and potential issues at the end of the year.
When it comes to tracking receipts and expenses related to your payment processors or fees, I’ve written a whole blog post on this (and other expenses) and the best apps/software to use. Check it out here.
Accounting Software for your online business
All of this comes together with an accounting software. You will be able to see where your business is doing well and where your business maybe needs some improvement. Bottom line is you need to have a system.
Here’s a secret: You don't have to pay someone for your bookkeeping. Shh, don't tell anyone. I definitely recommend you have someone like myself help you set it up initially as the moving pieces can be complex. It’s mostly knowing how to pull them all together and make them work together easily.
Once set up, your accountant or bookkeeper will then be there for questions, support, and advice. This is the role now that I'm taking with a lot of my clients. It's not coaching in that sense, it's a support roll, because day to day they can see exactly where they stand as the tech is doing it for them.
Working with me virtually is simple! Take a picture, forward an email... Put it into your accounting software, done. Or you do these steps once we set them all up for you. Easy-peasy, right?
Need some help? We'd love to help you. Another puzzle. Always exciting.
Reach out to me here.