Accounts are probably the most tedious and boring part of having a small business. Nothing makes me want to grab my sketchbook and run away like facing a mountain of receipts and invoices that need filing and analysing.
However, from day one I have forced myself to take this side of things seriously. Proper accounts mean I have a proper business. Which means I am not just someone who sits and draws cats for fun, I am a professional illustrator - albeit not full time at the moment - but when that day comes my paperwork and I will be organised and ready for it!
Now, I realise for us creative types this is not the easiest of tasks to tackle. And so, I did the sensible thing and bagged myself a boyfriend who is a qualified accountant. I thought I would share his wisdom with you all and so here are some top tips from my very own accounts fiend.
KEEP YOUR BUSINESS FUNDS IN A SEPARATE BANK ACCOUNT
You don't want to have to search through lots of personal payments/receipts to find whether a customer has paid you.
KEEP A RECORD OF EVERY TRANSACTION YOUR BUSINESS UNDERTAKES
File these in an organised fashion so they are easy to relocate. Apply unique references to your sales invoices to allow you to track their payment and include wording on them regarding the terms of payment e.g "payment in full within 30 days of the invoice date".
OPEN TRADE ACCOUNTS WITH SUPPLIERS IF POSSIBLE
You'll get better prices and/or better bulk discounts. There are lots of suppliers out there. Don't restrict yourself to a certain area. Most suppliers can deliver nationally via post or courier. Always ask for samples before placing an order.
DEVISE A STRUCTURED SALES PRICE
To do this work out how much you can buy your materials for (remember the more you buy the cheaper the materials becomes individually) and then see what products similar to yours are selling for on the open market. Remember it's always easier to generate more profit by reducing your materials cost than increasing your products sales price.
SELL TO STOCKISTS ON AN INVOICE BASIS RATHER THAN A SALE OR RETURN BASIS IF POSSIBLE
Remember to pick your stockists carefully (they will be representing you and your work as far as the public are concerned) and always ask them what their margin or mark-up is as this will determine the price they pay you and the profit you make.
Hope these help!
Let me know if there are any accounting questions you need answered and I will try and do a Q&A post - More accounting bits and bobs to come soon.