Accounting Basics Digital Marketers Should Know
Accounting plays a huge role in the success of a business. There are many different aspects of accounting, and all are important in order to measure and therefore grow your business. Having a good system in place helps with tracking revenues, tracking expenses, invoicing, and preparing taxes. Here are just some of the accounting basics digital marketers should know.
When It Comes To Expenses, Keep Track Of Everything
Keeping track of expenses is an important part of your business’ accounting that you don’t want to fall through the cracks. Not only will knowing your expenses define your run rate, that is how much cash you’re burning per month, but your expenses determine what deductions your business can take for tax purposes. Since deductions help you save money on taxes, it is really important to be able to keep track of expenses throughout the year. This is not something you want to fudge at the last minute. Aside from qualifying as deductible expenses, having good records serves as audit protection, just in case your return is ever reviewed by the taxing authorities.
A carefully laid out paper trail is what you want, one that you can easily revisit. Keeping all receipts and documenting all transactions, is generally a good practice. Having a physical filing system in place is not a bad way to handle accounting. However, it is not the most efficient way. Today, there are many apps available now that allow you to snap pictures of receipts and categorize them accordingly in accounting software. This saves a lot of time, and helps keep you organized. And as a digital marketer, it makes a lot of sense to implement and use a digital accounting system.
Reports That Matter
Another accounting basic digital marketers should know is which reports really matter. One of the advantages of using accounting software like Quickbooks or Xerox is the ability to run financial reports. Financial reports help provide a summary of the overall financial health profile of your business. Financial reports are a fundamental part of predicting future financial growth. Some reports that are important are:
- Profit and Loss Report – A profit and loss report provides an overall financial profile of the company. It takes into consideration all income and expenses and shows your remaining net income or profit.
- Balance Sheet – A balance sheet demonstrates a company’s assets and liabilities as well as shareholders equity at any point in time.
- Cash Flow – This is a summary of cash entering and leaving your company.
Schedule Accounting Time
Making a point to handle your bookkeeping is another accounting basic digital marketers should know. This can be difficult to do for many busy business owners but it is of the utmost importance. Invoices should go out each month at the same time where possible. They also need to be followed up on at regular intervals. And while bills aren’t fun, they need to be paid each month and on time. So, having a bill paying schedule can help you avoid any issues. When that’s all done, you should also have a defined “closing” period, for example, every month or at least every quarter. This keeps the accounting moving and your company financially disciplined. You will make a lot of mistakes if you do this annually and neither you or your bookkeeper will be happy.
Monitor Success
For digital marketers, monitoring the success of a campaign is crucial. It helps you understand what is working, and what isn’t so that you can improve your strategy. Monitoring the financial success of your business is also important. Good accounting can help you increase profitability, by helping your identify projects that have the greatest ROI. It can also help you analyze ongoing expenses, and made adjustments as necessary.
The Right Accounting Software For The Job
Another accounting basic digital marketers should know is that having the right accounting software is really important for accuracy. Good accounting software can make a huge difference in your accounting process. Some great options for digital marketers are:
QuickBooks – You are probably familiar with QuickBooks, and with good reason. QuickBooks has been the little darling of accounting software for a while. It is easy to use, and offers a lot of great features like invoicing, expense tracking, time tracking, reports, budgeting, check printing, and lending. There are several different pricing options ranging from $20-$150 per month with an additional $30-$80 per month for payroll. For the price and all of its features, it is a great value.
Xero – Xero hasn’t been around as long as QuickBooks, but it is equally as impressive with its functions, ease of use, and affordability. One benefit to Xero, is it allows unlimited users with the ability to set permissions, so you have control over who has access to what. Xero also has one of the strongest security reputations in the cloud accounting world.
Both of these programs have mobile availability, which makes keeping track of expenses a breeze. As of 2017, QuickBooks and Xero reported worldwide users of 5 million and 1 million, respectively, a huge market.
Know When To Outsource
One of the most important accounting basic digital marketers should know is to know when it is time to outsource your accounting. When you first start out, your accounting is pretty simple and straightforward. However, once you start to scale your business, things get a little more complicated. With business growth comes more income, more employees, and more responsibilities. It can be challenging to stay on top of your accounting and run your business at the same time. Some reasons to outsource your accounting are:
- Accountants specialize in accounting.
- It saves time.
- It can save you money.
- Reduces compliance issues.
When hiring an accountant it is important to understand that there are several different areas that an accountant may specialize in. Some accountants only do bookkeeping, while other specialize in tax preparation. Super accountants can handle both. It is important to identify what you hope to achieve by hiring an accountant so that you are both on the same page. As an added bonus, choose an accountant that has knowledge of your business, who isn’t going to think that a “Facebook” charge on your account is a personal expense.
These are just some accounting basic digital marketers should know. For more accounting tips please visit our partner site at www.mytaxhack.com. The accounting experts at The Tax Hack Accounting Group specialize in digital marketing tax strategies.