Here is the Table of Contents and the article with the requested formatting:
Table of Contents
1. Introduction to Expense Tracking 🔑
1.1. Importance of Tracking Expenses
1.2. Avoiding Accounting Headaches
2. Using a Free Expense Tracker 💰
2.1. Downloading the Expense Tracker
2.2. Recording Expenses Regularly
3. Transitioning to Accounting Software 📊
3.1. Introducing Xero
3.2. Automating Bookkeeping with Xero
3.3. Integrating with Sales Platforms
4. Monitoring Profits and Performance 📈
4.1. Utilizing Shopkeeper for Amazon FBA
4.2. Understanding the Difference Between Shopkeeper and Xero
5. Conclusion: Staying on Top of Your Numbers 🔍
5.1. Recap of Recommended Tools
5.2. Consulting with an Accountant
**Running a Successful Online Business: Mastering Your Finances with the Right Tools**
🔑 A key principle of running a successful business is being on top of your numbers. Whether you sell with Amazon FBA, on eBay, Etsy, Shopify, or anywhere else, you need to be on top of your income and expenses to understand if your business is profitable or not. In this article, I’ll be running through the different tools and processes that I use and recommend, all of which are suitable for small business owners that sell products online.
1. Introduction to Expense Tracking 🔑
1.1. Importance of Tracking Expenses
Regardless of whether you want to run your business as a sole trader or a limited company, recording every single one of your expenses is a must. Not only will this help you remember what you’ve spent your money on as the months pass, but it will also save your accountant a ton of time in understanding your financials, ultimately making your accounting bill much lower.
1.2. Avoiding Accounting Headaches
Speaking of accountants, if you don’t have one yet or you’re not happy with the current service you’re getting, I recommend checking out Awesome. They are a digital accountancy firm that specializes in accounting for people looking to sell with Amazon FBA, Shopify, eBay, and more. For viewers of this channel, you can get two months of free accounting and a limited company set up for the price of a pound.
2. Using a Free Expense Tracker 💰
2.1. Downloading the Expense Tracker
While there are a lot of expense tracking apps and websites out there, most of them do cost money, which might not be the sort of thing you want to spend on at such an early stage. That’s not going to be a problem for us, though, because if you’re watching this video, you can make use of the expense tracker I’ve put together and used for months when I first started selling products online. To download it, simply visit janssensmith.com, browse to my tools and resources page, and then download it.
2.2. Recording Expenses Regularly
The purpose of my expense tracker is to make your life and your accountant’s life much easier when trying to remember all of your expenses. Every time you incur a cost related to your business, whether that be buying stock, software, marketing, advertising, or anything else, you need to record the details of it in this tracker. I’d recommend updating this tracker at least once a week and then, once a month or so, sending it over to your accountant along with your receipts and invoices.
3. Transitioning to Accounting Software 📊
3.1. Introducing Xero
Once your business starts trading or you decide that you’d rather your accountant do all your bookkeeping for you, you’ll want to start making use of Xero. Xero is an accountancy software solution for small and medium-sized businesses that hooks up to your bank account and PayPal account, automatically recording all your revenue and expenses.
3.2. Automating Bookkeeping with Xero
After you or your accountant have categorized your expenses and revenue a couple of times, Xero will start doing your bookkeeping automatically. All that’s required from you is a quick confirmation. Xero also assists your accountant with calculating things like revenues, accounting profits, and taxes, all of which are essential for you to know if you want to maximize your business’s performance.
3.3. Integrating with Sales Platforms
One app I highly recommend if you’re an Amazon FBA, eBay, Shopify, or Etsy seller is Link My Books. This app allows you to connect Xero directly to all the platforms you sell on, automatically downloading details of your revenues, refunds, transaction fees, and platform fees. This is crucial for accurately calculating things like your VAT liability and overall profitability.
4. Monitoring Profits and Performance 📈
4.1. Utilizing Shopkeeper for Amazon FBA
If you’re an Amazon FBA seller, I recommend using Shopkeeper. Shopkeeper is an app that syncs directly with your Amazon account and tells you what products you’ve sold and the profit you’ve made over the previous day, week, or month. You can also use it for monitoring your advertising costs, inventory levels, and more.
4.2. Understanding the Difference Between Shopkeeper and Xero
The key difference between Shopkeeper and Xero is that Shopkeeper is a profits tool designed specifically for Amazon sellers, giving you granularity over individual product sales and profitability. Xero, on the other hand, is an accounting tool made for all sorts of businesses, allowing you to see your overall sales and profits from a bigger-picture perspective.
5. Conclusion: Staying on Top of Your Numbers 🔍
5.1. Recap of Recommended Tools
To summarize, start with my free expense tracker to record all your business costs. Then, once you start growing and incurring more expenses, upgrade to Xero and Link My Books. If you’re an Amazon FBA seller, also consider using Shopkeeper to monitor your daily profits.
5.2. Consulting with an Accountant
Remember to check with your accountant before enrolling in any of these tools, as some accountancy firms like Awesome may already provide them as part of their services. Staying on top of your numbers is crucial for running a successful online business, so make sure you have the right tools and processes in place from the very beginning.
**Highlights:**
– Importance of tracking expenses for online businesses
– Using a free expense tracker to record all business costs
– Transitioning to accounting software like Xero for automated bookkeeping
– Integrating sales platforms with Xero using Link My Books
– Utilizing Shopkeeper to monitor profits for Amazon FBA sellers
– Consulting with an accountant to ensure the right tools are in place
**FAQ:**
Q: What is the purpose of the free expense tracker?
A: The free expense tracker is designed to make it easier for small business owners and their accountants to keep track of all business expenses. It allows you to record details like the date, payee, and description of each expense.
Q: How does Xero automate bookkeeping?
A: Xero automatically connects to your business bank accounts and payment platforms, recording all revenue and expenses. After categorizing transactions a few times, Xero can start doing the bookkeeping automatically, requiring only occasional confirmation from you.
Q: What are the benefits of using Link My Books with Xero?
A: Link My Books allows Xero to directly integrate with sales platforms like Amazon, eBay, Shopify, and Etsy. This ensures accurate recording of revenues, refunds, fees, and other transaction details, which is crucial for calculating things like VAT and overall profitability.
Q: How does Shopkeeper differ from Xero for Amazon FBA sellers?
A: Shopkeeper is a profits-focused tool designed specifically for Amazon FBA sellers. It provides granular insights into individual product sales and profitability, whereas Xero offers a broader, accounting-focused view of the overall business finances.
Q: Should I consult an accountant before using these tools?
A: Yes, it’s recommended to check with your accountant before enrolling in any of these tools, as some accountancy firms may already provide them as part of their services. This can help ensure you’re using the right tools for your business and accounting needs.
**Resources:**
– janssensmith.com (Expense Tracker Download)
– www.voc.ai/product/ai-chatbot (AI Chatbot for Customer Service)