As my business started to take off with more income (and more expenses) I decided it was time to get serious about managing my money. When running a business no matter if it is a full-time gig or a side hustle you need to be keeping track of what you are spending and making. Understanding where you stand will help you make better decisions both financial and time-wise. If you track your money you can get an idea of how much money you are actually making and where the best place is to invest your time. You also want to make sure you are paying taxes (or at least putting some money aside) so that you don’t get a huge bill at the end of the year that you can’t pay.
Thinking about money makes many instantly feel stressed out but keeping track of your business spending will empower you and inspire you to keep going. Your side hustle or business is about taking control of your financial future so it is important to track it.
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Free option – Excel or Google spreadsheet
If you want a lower-tech (and free option) then Excel or a Google spreadsheet is your best option. For every cost or income just manually type it in. You can create some basic or advanced formulas to give you a monthly/year/YTD snapshot and if you are an excel nerd like me you can also create cash flow statements.
Using personal finance software
Until now I have used excel and my personal finance software to track my expenses. I use PocketSmith to manage my personal finances. I love it because it automatically pulls in my data from my multiple bank accounts/loans/credit cards and automatically categories my most common purchases. It has budgets and shows cash flow. There are a few different options for ‘personal’ finance tracking, I use PocketSmith because it tracks multiple currencies and imports from international bank accounts that I own having lived in different countries. If you have a small side hustle that you operate as a sole trader, then you can set up a ‘business’ category and track it all there. It is simple, won’t take up much of your time and will give you a basic snapshot of if you are making or losing money. The bonus here is you will track all of your personal expenses too. Create a personal budget, find areas to save some money then invest it in your business. Win-Win!
Business accounting software
The best long term investment you can make is in business accounting software. I am preparing to take my side gig to a full-time gig. That means outsourcing and creating systems in my business so that I can spend my precious time on higher-impact tasks that will result in more profit. While personal finance software or excel are cheaper they are also so much more time-consuming. For a small monthly charge ($7) I now streamline my accounting, I can at the click of a button or two evaluate my current financial position and forecast my future. I’m also going to save hours at tax time too. That alone will make the investment in the software worth every dollar.
There are a number of different options for business accounting software. Here is where I called in an expert, my husband who is an accountant. He recommended a cloud-based system because of the flexibility and (relative) ease of use.
The main players in the market are Xero and QuickBooks. There are many similarities between the options. I was looking at QuickBooks because it is a little cheaper and offers multi-currency support on a lower-tier however I ultimately went with Xero as it is more intuitive and user-friendly.
