Keep Business & Personal Separated
You want to keep your business and personal finance separated what does that mean exactly? Um it means especially if you're a sole proprietor where like you are your business uh that you keep your bank accounts separate that you keep your credit cards separate but you keep your receipts separate and that you keep your cash separate. Um I do this with a whole separate wallet that I made myself out of fabric scraps I was very proud of myself. I still have that wallet. Um I could show it to you guys tomorrow. It's really sad now because I made it ten years ago with fabric scraps and like, I mean, I didn't measure correctly for the pattern like I develop the pattern myself it was like whatever I sew for a living I develop patterns I could make all wallet I make hams I could make up thing outta rectangles that's easy um and then I didn't measure correctly for the seam allowance and so like my dollar's technically fit in there but they poke out like an eighth of an inch above the top of the ...
wall it's you can like it's it else I'll show it to you just for laughs but anyway I keep it in my purse and I have kept it in my purse for as long as I've had the business and so whenever I spend money on the business or I make deposits or whatever the receipts go in that wallet my petty cash goes in that wallet so I'm never spending personal cash on business items and vice versa um I have two business credit cards that a use if I don't have the cash on me I'm gonna keep those separate and then I have a separate business bank account um I have it with the same bank as my personal account where they can, you know, link those two together so you can meet minimum balance requirements and avoid you know, monthly service fees and that sort of thing so it doesn't have to be in a separate bank but um you definitely want to have a separate account because especially when we look at reconciliation in another segment um it's really hard to match up all of your income and expenses and your payments on your deposits to just one account to have to do that mixing it up with all of your personal stuff and like bringing equity into the picture is a nightmare and I would never want to do that and I don't wish it on you um so if you really are going to track your business, you've got to keep all of this stuff separate I want you to be like, rosalie this is rosalie gail she uh co owns a brick and mortar store in seattle she also freelances as a web designer and she sells stuff retail on an etsy shop called ugly baby she makes these things behind you there shower art um and you they have big suction cups on the back and you stick him in your shower I have one they're great it's a unicorn on roller skates and this is how I roll and so when I get in the shower in the morning I look at this and I'm like yeah haters gonna hate whatever I'm awesome I'm a unicorn on roller skates um and so she has a lot of different things she has to keep track with rate she's a partner in a brick and mortar store that um sells things retail she has her own separate retail shop online and then she also does consulting so like if anyone should be too busy to do bookkeeping it's this lady right here but she knows better and she does her bookkeeping like a champ like she will not go out for drinks or visit somebody because it's the first two weeks of january and by gosh she is going to finish those year and books before she does anything else um so I'm ready to be like rosalee she was kind enough to share her process um and I'm not going toe you know read this out loud but you can take a minute to go through it and just see uh the perspective of another crafter because what I'm giving you today is my opinion. This is the way that I handled things. This is the way they make most sense to me. Um but they're all slightly different ways based on your personality, the way you liketo work, the kind of business you have. Um, so, uh, like rosalie enters the transactions from her business credit card from the statement, um, I enter the actual receipts that I get in my wallet and then compare that to the statement later. Um, but, you know, either way is is perfectly reasonable. Um, credit card finance charges. If you're running a balance on there is something that you might have to keep track of. Um, she reconciles all her receipts for one business before she starts looking at, uh, the expenses for her retail store, and she has a partner, so she's got to divide all of those in half, right she's going to take all those receipts and then make sure that she's entering them all by half because that's her half of the business, um she has categories for what she sells in her retail store. So if you have product categories that's something that you might wantto add to your ledger that you might want to keep track of in the notes, um and this is how she does it. Um, you know, I gave you my order of operations where I basically said you take your income or your expenses, then you take your deposits of your payments and then you're gonna look at your bank statements and make sure it all matches up. She does it in a different order, but she's covering all her bases so that's perfectly fine. Um, and then, you know, this keeps going it's a very long process. Uh, I wanted to show you at the bottom here her, her file folders. Um she uses all of these different file folders to store everything I like to use, uh, things like this that have, uh, prepaid, uh, premade pockets sort of built in so that in the front part I can keep those, uh, invoices and, uh, bills and receipts in the front and then behind that I can keep my payment stubbs and my deposit slips uh and then behind that I can keep my bank statement it's so that I have everything in order so I enter everything that's in pocket one then I can check and make sure did I get paid for all those invoices? Did I send checks out for those bills, uh, make sure that that matches up with pocket too? And then in pocket three, uh, which we'll get to in another segment, I have my statements, my credit card statement, my bank statement, where I go through and I check off everything that's in there against what I've already entered. That's, the reconciliation part of this. So I taught you the way, and I will continue to teach you the way that this works for me. Ah, but you're free to adjust it in any way that works a little bit better for your personality or your business.