Bookkeeping is tiresome. Taxes are worse than annoying, they’re excruciating. But my father always said that the only thing worse than paying taxes is not paying taxes. I mean, I get it. But it sucks.
I was chatting recently to an exceptional makeup artist named Kate, who does weddings around the Finger Lakes area. I asked Kate what her most tedious business chore was; she replied bookkeeping. I get it.
Many event businesses are large enough to hire teams of people, and the company payroll includes HR and accounting, and if that’s you, then skip this. But many more event planners and other industry pros are freelancers, or solopreneurs or have small teams. If you fit into the latter group, this one’s for you. *raises a glass.*
Our CEO, David Jacobson, is an MBA and has a master’s degree in accounting. He’s not only about event planning software. I bugged him to share some tips, and I’m going to lay it out for you here. While we can’t give you any hot and heavy tax advice, we can share some suggested best practices.
Related: 23 Tax Deductions For Event Pros
Cloud-Based Accounting FTW
It’s the 21st Century. We don’t have hoverboards, at least, not real ones, but we do have cloud computing. And that means cloud-based accounting software is available, affordable, and highly recommended. But it absolutely must be linked to your bank.
See, cloud-based accounting software linked to your bank can pull in transactions with minimal delay. You’ll be about as up to date on your expense tracking and cashflow status as possible. A near-real-time transaction feed gives you a decent idea of your business expenses, especially when you’re working with other people. It’s ain’t instant, but it’s still likely to be within a day.
Another benefit is that while your client’s tasting cake, you can manage your accounting on your mobile phone. This minimizes the chore factor. With that in mind, let’s talk control and calm.
A Daily Meditation on Your Financials
Okay, I dig the Daily Calm as much as anyone, but true peace of mind comes from control. I can’t think of anything more confidence-building than control of one’s finances. Even if cash is tight, the more on-the-ball you are, the calmer you can be.
Thinking back to my musician days, when I was mostly broke, I adhered to the ignorance is bliss methodology. Well, it doesn’t work! The gut-wrench that occurs when you’re unsure of your cash flow and expenditure is debilitating.
David recommends taking ten minutes a day to update your books.
According to Emma Fox over at Fresh Financials, doing your books quarterly, or even monthly, “means the bookkeeping becomes detached from the day to day systems within your business.”
Daily bookkeeping keeps your event planning business up to date with how your it’s performing. Like money owed, who’s waiting for an invoice, and what your future cash flow will look like.
David explains that when you’re entering your event planning business expenses daily, the details will be fresh. You won’t drop anything, nor will you waste time chasing down details that you’ve forgotten.
At ThymeBase, we’re all about maintaining a sense of calm. Events are frenetic, intense, and full of surprises. Your business health should be clear-cut and organized. Boring is best when money and taxes are involved.
Consider A Professional Accountant for Your Taxes
The decision to hire a Certified Professional Accountant, rather than a tax preparer is a big one. A CPA is significantly more expensive, but it’s an investment worth making once your business grows.
Apart from the annual filing of taxes, a CPA can help in several areas. The yearly fee with a CPA often functions as a retainer, and it’s not a one and done relationship – kinda like your client- event planner relationship. They’re available year-round to answer questions, give advice, and explain best tax practices.
A CPA will offer you advice, and I mean expert advice, on what is and isn’t a write-off for the event planning business specifically. And if you ever get audited, a CPA in your corner will be invaluable.
Then there is tax planning.
Tax planning goes beyond write-offs and paperwork. A CPA will help structure your business, ensuring you pay what you owe, make the right decisions around deductions and tax credits, and what records to keep.
It is absolutely feasible for a CPA to help save you more money than they cost. A good strategy can cut your tax bill considerably.
Professional Planning Is Worth the Investment
Professional planners throw the best parties. Your accounting isn’t any different. Paying a relatively small fee to a professional to set up your books, your process, and especially your chart of accounts is an investment that will save you headaches down the road.
A chart of accounts is a document that, according to Freshbooks, “lets you present all the financial information about your business in one place.” Often abbreviated as COA, a chart of accounts tracks the money you earn, but it does a lot more. It covers your assets, liabilities, equity, revenue, and expenses.
Confused? I was. David clarifies, “A COA is basically a list of revenue, expenses from which your accounting software builds out your financial reports.” Pretty useful, right?
You’ll know your income intimately, including the highs and lows, your cash flow, and how long your cash will last considering your monthly business expenses. The COA also helps you figure out how much of your income can go to paying off debts.
Tracking your expenses in a measured, formal way using a COA allows you to find cost-cutting opportunities and helps you understand your financial position. So, just like any client needs to know how their budget impacts their event, a COA enables you to understand your business’ health.
Lastly, at tax season, having a COA will simplify your life. Because it closely tracks expenses and income, it starts you off with a solid foundation.
It’s Your Business So Own It
Do you know your cost of revenue? Do you know how much your equipment is worth? How much did you spend on entertainment last year? I’m going to share advice from David that I struggled to follow in the past. Take it from me, I wish I’d taken the time for this in my previous businesses.
Take a few hours and learn how to read your three primary financial statements. Get comfy with your Profit & Loss statement, your balance sheet, and your cash flow statement.
Understanding your financials at a deeper level will help you run your business efficiently and potentially save you a lot of money. As David puts it, “If marketing is the heart of your business, and operations are the brain, then accounting is the lifeblood that touches everything. Accounting impacts every part of your event planning business, so understanding the big three statements can help you make your business more profitable.”
Healthy Mind, Healthy Event Planning Business
Entrepreneurs all share the same characteristics, whether planning conferences or launching startups. There is a risk of creeping fatalism – where we focus on the art and the vision and let the money figure itself out.
Let’s commit together to looking after our business health as much as we look after our clients. It’s the path to enlightenment, a sense of calm, and a profitable business.