Let’s talk about the “B” word.
Not that “B” word… Get your head out of the gutter.
The word I’m talking about is BOOKKEEPING. Unless you’re one of those awesome nerds (like me) who just love math and money, it’s the vain of your existence. It’s tedious, it’s complicated, and it’s the thing that helps you lose money to taxes.
If you don’t keep track of your expenses and books throughout the year, you will be crying come tax season. So much gets factored into taxes for small product-based businesses. If you aren’t adding to your lists every month, if not every week, you will end up spending a big chunk of money hiring someone to help you sort it out.
Don’t be that person. Keep up with it now, so that you can coast into tax season with a smile on your face instead of etching in a few more frown lines.
Maintaining your books and submitting your taxes is not pleasant, but absolutely necessary. You know, to be contributing members of society and stuff. But what on earth do you need to keep track of your books? I’ll be honest. It’s a lot. But don’t worry, this is my jam. I’ve got you covered.
So, without further ado, here is your complete list of expenses that you should be tracking for your handmade product business:
- Materials: All the supplies that you purchased to make your products
- Inventory: Make sure to include what you had on hand at the beginning of the year, date and amount, as well as what you have on hand at the end of the year, date, and purchase amount
- Office supplies: This includes, but isn’t limited to, paper, ink, staples, boxes, labels, and stamps
- Phone: The bill for whatever phone you are using for business
- Business insurance
- Business interest: The interest earned in your business bank account
- Shipping: All fees, both to and from your store
- Selling fees
- Subscriptions: This includes, but isn’t limited to, Photoshop, Canva, and Quickbooks
- Software: Such as Adobe, Xero, Microsoft Office, and TurboTax
- Purchases over $400: Make sure to include the date of purchase and the cost
- Utilities: Use the bill from wherever you conduct business, whether that be at home or a store
- Mileage for business: Keep track of every mile that you drove that related to your business
- Labor employees and subcontractors: Wages and expenses
- Advertising: This includes, but isn’t limited to Facebook, Instagram, Etsy, and radio ads
- Craft fair and vendor fair fees: What you paid to participate in fairs
- Permits and city licenses
- Professional fees: This includes, but isn’t limited to, the amount you paid your accountant for your business taxes, what you paid for product photography, etc
- Sales taxes
Now take a deep breath. It feels like a lot, but it’s pretty easy to keep up with once you create a procedure. Determine all of the items that you need to include that are specific to your business. Create a checklist, make your folders, and prep your spreadsheets. Get prepared to start the new year with a bookkeeping system in place.
Tax season doesn’t have to be stressful!
Looking for something to help you get organized, Check out the expense tracker for creative sellers https://kdbehindthebooks.com/expense-tracker-training