Why use a balance sheet?
It’s old school and for years I thought what a boring way to run a business…then I realized I was constantly stressed out whenever I had to use my credit card for client materials and pay a large annual office bill in the same month. Had I planned ahead and forecasted a way to plan for the annual bill and use the extra revenue from previous months to save for unexpected project materials, I would have been much more relaxed.
A balance sheet gives you a snapshot of your financial status. Creating a monthly balance sheet for each month ahead of time can help you predict and track upcoming bills, the ebb and flow of revenue and what assets you have and their approximate value. If a big insurance premium or annual contract/lease payment occurs once a year or monthly, you can better prepare to pay your bills and budget so it doesn’t affect your revenue in one HUGE hit. Emergency costs or out-of-pocket expenses can occur monthly, having the know all to prepare your bank account will help you deal with these setbacks. It’s just like your household budget or maintaining your home, being aware of when you need to shell out the cash for certain planned expenditures can help you save money for the unexpected ones.
In addition to balance sheets, just about everything you need for accounting are available via mobile apps. Below is a list of a few I’ve used. If you like to work online and prefer the cloud there are tons of options to choose from, do a little research and find the most comfortable way for you to manage your business finances.
In addition to starting a balance sheet, talk to your accountant about ways you can better manage your business expenses and profit.