Home Business Bookkeeping & Budgeting

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Let’s talk about home business bookkeeping and budgeting. When you quick-launch your Virtual Assistant business, the basic first step is figuring out a way to get paid and access the money you earn. This means you need to choose a payment processor, share the link with your clients, and connect it to your business bank account.

But, you will also need a bookkeeping system.  This will help you make business decisions based on facts, not emotions.  And of course, it will help you at tax time.  

As you gather information in your bookkeeping system and become booked out with client work, you will then be able to create a business budget.

In this blog post, we’ll assume you’ve recently decided to launch your small business.  That you are doing the quick-start home business as a sole proprietor.  If you decide you want to set up an LLC or Corporation of some sort, you’ll need to consult with a lawyer and/or an accountant to see what special steps and documents your State will require.  However, this blog post will give you a give overview of the basic foundations.

Online Payment Processing For Virtual Assistants

As an individual, the easiest way to get paid is through an online payment processor. These are companies that manage transactions between buyers and sellers online.

One of the most popular payment processors worldwide is PayPal. It can be accessed almost anywhere in the world and is easy to use. By just sharing your PayPal-linked email address, you can send or receive funds. You can also withdraw money from PayPal to a bank account linked to it.

PayPal is an easy option to start with, but I will throw out a caution. PayPal generally sides with the client (the person who sent the money) whenever there is a dispute for charges. Hopefully, this would never happen, but I have heard terrible stories of payments that were retracted by PayPal because the client disputed.

Each payment processer has its own terms and services, but the best system to research is Stripe.  Stripe is a payment processor that links with your bookkeeping program, ie, Wave, Freshbooks, Dubsado, AndCo.

Budget For Your Virtual Assistant Business

Since you will be running your own Virtual Assistant Business, you’ll need a budget to manage your income and expenses. A common myth is that internet-based businesses have no overhead. In reality, they have low overhead compared to traditional businesses, but there are still essential expenses to starting your business. These include:

• Internet service, including Wi-Fi
• Website domain, hosting, and other platform costs
• Computer hardware and other equipment including cameras, microphones, and other devices
• Software and software monthly expenses
• Business-related expenses such as advertising, continuing education, membership fees, and fees from payment processors

In the beginning, it’s actually very simple. Get your business budget started by listing every known expense in a Microsoft Excel document or even just a Google Doc.  Don’t overcomplicate this – think simple, basic no-frills, no design… you just want to make sure you’re tracking your expenses consistently.

Budgets are usually separated into fixed and variable expenses. Fixed expenses are those that stay the same each month. Variable expenses fluctuate or are optional. Usually, fixed expenses are essential while variable expenses can be cut if needed.

If you don’t know exactly how much something will cost, research typical costs and make an estimate. Overestimate so that you’re safe in case things cost more than you expected.

Your first budget won’t be totally accurate, but you’ll keep refining it each month.  Keep track of all your expenses for your business and, month by month, you’ll begin to gain an accurate budget number for each.

After you’ve been in business for a few months, you’ll want to start using bookkeeping software program. A system that connects to your bank account and automatically imports your income and expenses every day. One of the most well-known programs is QuickBooks – however, it can be a bit much for a small home business owner. Freshbooks is easier to use and affordable. Another good option Wave.

Using a bookkeeping software program will make your tax preparation much easier.

Tips on Successful Budgeting For Your Virtual Assistant Business

Budgeting is an essential skill in any kind of business, but especially if you’re working for yourself. You don’t want to be working hard for clients all day, only to find out that your spending it as fast as your making it.  Creating a business budget is the best way to ensure you don’t break your carefully-earned piggy bank.

5 tips for successful budgeting:

1. Choose a simple method for tracking your expenses – find the one that is the absolute easiest for you to use and understand
2. Take advantage of free trials for software programs to make sure it offers what you need before you invest in a paid plan
3. Prioritize expenses so that it’s easy to know where to cut costs when you need to
4. Try to forecast client work (income) over the next few months. For example, if you’re a social media manager, communicate with your clients try to have them sign service contracts with a three month or six-month minimum
5. Don’t forget the good and not so good long-term expenses – like quarterly payments for your own retirement account or paying your taxes

At one point I got really lazy about my bookkeeping. I had no good excuse… I just didn’t set aside 10 minutes each week to keep up with it. So, I made one of the classic mistakes of being a new business small business owner: recurring expenses! I had way too many $5 to $15 charges each month. I was overwhelmed and I didn’t really know which way was up. I realized that it was up to me if my business was going to be a cash-eating monster or a money-making machine. So, the bottom line: create a budget and stick with it.

How much should you charge your clients?

If you want to attract clients and make a profit from the start, you need to set the right price for your services. If you set your prices too high, you can price yourself out of the market. If you price your services too low, you can de-value your services and brand.  This will cause you to lose money.  You’ll end up burnt out and frustrated.

Consider the following two factors to help you find the right starting prices: your ideal client avatar and your competition.

Your Ideal Client Avatar

Through understanding your services’ unique value, you can determine what it is worth to your ideal client avatar and what they will pay for the solution you are offering.

Your Competition

Research what other service providers are charging for similar services to your ideal client avatar.  For each service provider, answer these three questions:

1. How does your competitor market to its clients?
2. What are your competitor’s prices?
3. What unique value does your competitor offer?

Take all your answers into account, and then decide how you will set your initial prices for whatever you plan to offer in your new business. Don’t worry about getting it exactly right. You can always adjust your pricing as you grow and learn more.

Save Money and Payoff Debt Before You Quit Your 9 to 5

Before you make the leap to starting your own online business and working from home, you should have some money saved up. You may have to live without a full-time income for a time while you get your business off the ground.

How much should you save? It depends on how long you can live without a full-time income. A good guideline is to save three months’ worth of expenses. If you can, put away enough for six months to be safe. It’s really hard however the bigger your cushion, the less stress you’ll feel.

If your business is up and running before then, you can use these extra funds for something else, like starting a retirement fund or investing in a new computer. 

With your budget in place, you’ll know how much you need each month. Multiply this by the number of months you’d like to secure your income, and you have an amount to save.

Home Business Bookkeeping & Budgeting – The Mini Action Plan:

At Today’s Home Business we believe that there’s nothing magical or mysterious about work-life balance. Launching a small business and being your own boss is the first step to maintain the healthy boundaries between your professional life and personal life. 

So, if you’re ready (I mean really ready!) to go from full-time to freelance, then the fastest way to earn legit money is to repurpose your knowledge, skill, and ability into a business to business service.

Whether you want to become a Virtual Assistant, Social Media Manager, Marketing Strategist, SEO Consultant, Web Designer, Graphic Designer, Copywriter, Bookkeeper, or any other online service-based entrepreneur – you’ll need to create an action plan. 

The beginners mini-action plan for your Home Business Bookkeeping & Budgeting are:

1. Sign up for PayPal or another online payment processor.
2. Ensure that you can receive money through bank transfer.
3. Start your business budget with as much detail as you can. Tailor the categories to fit the business model you picked and your own personal needs.
4. Set a starting price for your services
5. Decide how much you need saved and create plan for saving money to cover the initial period before you’re earning a full-time income.

You can download our FREE quick start guide Employee to Entrepreneur.