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Issue #8 • August 2017

Master This Simple Accounting System for a Thriving Online Business

Strategic Planning Strategy & Operations

As a blogger, you do an exceptional job of building a business through compelling words and images. Blogging is your passion, after all—and you’re darn good at it. But putting together great posts is only part of your responsibility now that you’re a small business owner.

You may be a blogger at heart, but as you grow, you become a business too. That means you’ll need to tend to the more administrative and financial side of your blogging business: accounting.

Maybe numbers give you the iks, but good accounting is the key to running a thriving livelihood as a blogger.

Want to be a legit small business? It all starts with understanding accounting for bloggers

To grow your blog, you have to push beyond blogging as a hobby. Having a great blog or an impressive email marketing strategy is the foundation of your success, but if the inner workings of your business are in knots, you limit your potential.

To grow a healthy and profitable blogging business, you also need to develop an understanding of finances and accounting.

This is essentially the administrative (invoicing, expenses), tracking (profit and loss), and organizational (project planning, time tracking) side of your business.

Ultimately if you get those ducks in a row, you’ll have a better shot at nurturing your blog into a successful business. What’s more: If you use the right tools, you’ll have even more time to focus on blogging!

The secret: Grow your blogging business with the right accounting tools

Finances shouldn’t be something you look at once a year at tax season.

If you want to stay on top of your books (which you should), it’s a process that requires your attention all year round. That way, when tax season comes around again, you’re bright-eyed, ready and organized.

The good news is we’ve come a long way from the days of calculators and clunky spreadsheets. There are many tools that help you put your day-to-day invoicing and accounting on the cloud.

This means you can invoice on-the-go, right from your mobile device. And all your important information is secure and recorded, taking the manual work out of report-building.

Imagine if sending an invoice was as easy as sending an email? It isn’t a dream– it’s a reality that already exists with a tool like FreshBooks. Here are some of the tasks it can help you with:

Grow your blog business with the right accounting tools- Paid FasterGetting paid faster: Invoices and payments 

Have you ever accidentally saved over an invoice? Or had to manually create an invoice—plus make it look presentable at the same time?

FreshBooks allows you to easily update and customize invoices, so you can look more professional—and by enabling online payments, you can get paid faster too! What’s more, you can set up recurring invoices and automate late payment reminders. So no more awkward conversations with clients, giving you more time to blog.

Grow your blog business with the right accounting tools- EstimatesSetting clear expectations: Estimates

Keep misunderstandings from happening by ensuring you and your blog sponsors are on the same page. An estimate allows you to break down the details of a campaign with clear expectations and timelines. Plus, with FreshBooks, you can also turn an estimate into an invoice, making it easy-breezy!

Grow your blog business with the right accounting tools- ReceiptsNo more scrambling for receipts: Manage business expenses on-the-go

It’s easy to mistake all incoming money for profit if you don’t have control of your costs and expenses. Whether they’re billable, tax-deductible or just need to be tracked, you’ll want an easy way to capture them.

FreshBooks allows you to easily snap a picture of your receipts so you save yourself the work later on. You can also import activity from your business bank account so you can track all your outgoing expenses and categorize them correctly for tax season.

Grow your blog business with the right accounting tools- Time TrackingManage where you spend your time: Time tracking

We all want to manage our time more efficiently. We also want to know what our time is worth so we can set the right rate for clients. For instance, if you’re selling sponsored posts, you’ll want to understand how long it takes you to create that content from scratch. A time tracking tool can help you really figure out if you’re earning your worth!

For example, $1,000 for a sponsored post sounds great up front, but maybe not if it takes a month to complete all the work. What’s more, this information also allows you to estimate your time more effectively for future projects!

Want to see where all your “good accounting” comes to life? The reports tool in FreshBooks gives you a play-by-play of the health of your blog business. Want to understand what client brings you the most revenue? Or learn the details of your Profit and Loss reports?

Automatically-generated reports track all your invoicing and expense activity, so you can look at the present and plan for the future. No more manually compiling reports in spreadsheets– you’ll have more accurate, timely, and easy-to-understand reports. Best of all, come tax time you’ll be ready!

Grasp basic accounting for bloggers: The key performance indicators (KPIs) you should track for your blog

As FreshBooks builds your financial reports, you may encounter some unfamiliar accounting jargon. Don’t let this scare you.

We know you're a blogger (not a CPA!), but understanding and managing your financial reports are completely doable. Ultimately, tracking KPIs will help you make better decisions, grow your business, and be healthy on the inside and out.

So think of FreshBooks as your financial personal coach. For instance, you don’t need to know everything about how your body functions, but we’re going to help you understand the differences between working your glutes and working your core.

To help keep track of what’s working and what’s not, you’ll need to identify the key performance indicators (KPIs) to measure your business against. Here are just a few of the important ones.

Profit and loss (P&L)

Profit and loss reports are a simple way of measuring success. This report gives you a breakdown of your business income and expenses over a period of time to show either a profit (income exceeding expenses) or a loss (expenses exceeding income).

By looking at your profit and loss report from a monthly, quarterly, and annual lens, you can:

  • Monitor where your cash is going
  • Identify the less busier seasons of the year to make more informed spending decisions
  • Analyze your business growth over time.

Outstanding revenue

Do you keep tabs on clients who haven’t paid? If not, this can have a negative impact on your cash flow. To make it easier on you at tax come, regularly attend to your receivables and apply payments to your invoices on a consistent basis.

Income by client

At the end of the day, which of your clients help contribute to your bottom line? At first it may be exciting to land any kind of work but as you grow, identifying the most valuable ones—or anchor clients—is your key to success.

Ultimately, tracking income by customer will help you make informed decisions, like nurturing more profitable relationships.

Sales tax

A big no-no in the freelancing world is to collect tax and spend it, mistaking it for income. So keep in mind: Paying the necessary amount to the government is part of managing a business. And ultimately, the frequency of sales tax payments depends on the volume of your sales.

If you’re unaware of how to account for sales tax, you could end up with messy penalties for late payments. So routine reporting will help you become much more effective at tax planning.

Revenue by service

If your blogging business offers a number of services, have you ever looked into where most of your actual revenue comes from? Maybe you offer display advertising, guest posts, sponsored posts, and product reviews?

Identifying which one of these top performing areas helps to inform how you market, grow, and eventually staff your business.

At the end of the day, you want to increase your efficiency. You’re a mighty small business owner, so you should devote more time to the services that contribute to your bottom line.

Accounting 101 for bloggers

It’s a huge accomplishment when you build enough of an audience to consider making the switch from blogging as a hobby to blogging for your business.

But it would be a mistake to continue as a hobbyist after you’ve made that transition. Now is the time to think about your blog as a business and that means making sure it’s healthy on the inside and out.

So equip yourself with a little accounting 101, plus the best tools to achieve good accounting habits. Because, before you know it, running a business will become second-nature, and you can wholly focus on doing the job you love.

Want to take FreshBooks for a spin? Try it free for 30 days and discover how ridiculously easy cloud accounting can be!

Megan Santos

Megan Santos is the Content Editor at FreshBooks—the #1 accounting solution in the cloud for self-employed professionals and their teams. Her mission: To help ideate and create inspiring stories that helps small business owners thrive. But when she’s not typing away at FreshBooks HQ, you can find her out hiking in the woods or at home cuddling with her cat, Mookie.

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