In this day and age it is more important than ever to have multiple sources of income.  As a parent having multiple sources of income means reaching 3 ultimate life goals: achieving financial stability for your family, reclaiming control of your time, and having the ability to finally focus on your mental and physical selfcare.  Implementing a content creation business model within the creator economy has proven time and time again that these goals are within reach. Parents can finally have their cake and eat it too. The key to creating and maintaining this lifestyle is having a firm handle on a financially healthy business, which many content creators lack.

It’s not enough to earn $100k.  To have a firm grasp on financial health of your business you need to know where your income is coming from and where your money is being spent.  The easiest way to control the journey of your cash is to have a solid bookkeeping system. 

Having this system will ensure you understand:

– How much money you really have available at any given period in time

– You are able to identify which of your business activities are making you the most money

– How you can maximize your tax deductible business expenses to help you reduce or eliminate your tax bill and…

– How to track the growth of your business

So, today, I am going to show you how to create a solid bookkeeping system that you can implement within the next 24 hours so you can master your money and grow your brand.

Let’s get into it.

Create Your Cash Management System

What is a cash management system?

A cash management system is where you create multiple bank accounts for your online business that will make it really easy for you to place cash earned into financial buckets. This way you no longer have to worry about if you have enough money to cover any business expenses and/or your business taxes.

Why do you need this system?

Have you ever heard of the phrase “Out of sight, out of mind”?

When you setup a cash management system, you make it really easy to avoid having to figure out if you’ve dipped into the funds that you need to strategically set aside to pay your taxes, yourself, and grow your business.

How do you set this up?

Step 1: Find a bank offering FREE business bank accounts

A bank offering free business bank accounts will save you a lot of money on monthly service fees. A good place to look for free business bank accounts are credit unions and local community banks. They are more likely to have no bank account fees and are known for building a personal and business relationship with their account holders. This comes in handy if you want to start building credit for your business or you want to take out a loan in the future.

When looking for a bank to call your home, you want to find one that:

• Requires little to no money to open the account
• Doesn’t require a minimum balance

This will come in handy as more times than not, you may find yourself with a low bank balance after purchasing online courses or software to run your business.

If you are just starting out and don’t have enough money to open a formal business such as a LLC (Limited Liability Company) or elect to have your business classified as a S-Corporation (Small-Business Corporation) for tax purposes, then you can start off by creating a personal bank account that you only use for business purposes.  This way you have an account that is separate from your personal funds that clearly tracks money coming into and going out of your business.  These types of accounts come in handy during tax season as you will not have to scramble to figure out how you funded your business nor what purchases you made to run your business before your have formally chosen a business entity. Having this separate account will relieve a lot of stress.

Please note: Using a personal bank account for business purposes should be temporary.  You really want to open a formal business as soon as you can so you can open bank accounts in your business name.

Step 2: Open multiple business bank accounts

The moment you formally open your business, it is really important you execute this step. Having multiple business bank accounts will make it really easy for you to place cash earned into financial buckets. This way you no longer have to worry about if you have enough money to cover any business expenses and/or your business taxes.

To do this:

1. Gather your Articles of Incorporation Certificate. This is proof that you have a business registered with the state.
2. Gather your Certified Employment Identification Number (EIN) Letter from the IRS. You will need this number to open the business bank accounts.  This is free to apply for through the IRS.  Once you apply for this number make sure you do 2 things:
   • Take a screenshot of the EIN number they give you once you submit the application.  While this is not required, I like to save it anyway for peace of mind.
   • The IRS gives you the option to an official copy of this letter emailed to you.  Download it and keep it in a safe place immediately.

It is extremely important that your business is registered with the state before you acquire this number.  I have seen it where business owners have acquired their EIN before registering their business and finding out that their chosen business name is already taken.

1. Open 5 business bank accounts. One to receive your business income, one to pay your taxes, one to pay yourself, one to run your business, and one to set money aside for a rainy day and/or bonus for yourself.  These financial buckets will make it really easy for your to control your business cashflow.  I really like using the Profit First system as this has proven to help businesses I’ve worked with stay afloat during tough times.  This system came in really handy during the global pandemic.

Create Your Digital Filing System

What is a digital filing system?

A digital filing system is a record keeping system that stores important documents such as bank statements and receipts in an easily accessible virtual location. This location may be located on your computer, mobile device, or within your cloud storage account.

Why do you need this system?

Income and expenses claimed on your tax returns automatically generate a digital and/or physical paper trail. A digital filing system provides a central location where you can store these records in the event you need to access your financial records immediately from anywhere at anytime.

How do you set this up?

Step 1: Choose a cloud storage provider

Cloud storage services make it super simple to store financial documentation. The great thing about these services is that they have a free option and are accessible from your computer and mobile device(s).

To do this:

1. Create a free or inexpensive account with your preferred cloud storage provider. Google Drive, Box.com, Dropbox, and Amazon S3 are all great options.
2. Download the desktop folder associated with your cloud storage provider. Use this folder to save or access financial records from your computer.
3. Download the cloud storage app onto your phone and/or tablet. This will allow you to digitize your financial documents (i.e. receipts) in the office or on the go.

Step 2: Create a series of digital folders

Creating a series of digital folders that align with your business finances is the best way to structure your filing system for effortless financial record retrieval.

To do this:

1. Create an accounting folder within a folder with your business name
2. Inside your accounting folder create a folder with the year (20xx)
3. Inside the year folder create a series of folders labeled business bank account, business credit card account, personal funds, and payroll
4. Inside of the bank folder, create a folder for each bank account type (i.e. Operating Account, Tax Account, etc.)
5. In each bank, credit card & personal funds folder create a monthly receipts folder

Pro Tip: Create the year folder with the series of accounts within them once as a template. Each year you will be able to duplicate this folder series to use for the current year.

Set Up Your Financial Tracking System

What is a financial tracking system?

A financial tracking system documents any earnings that come in and any expenses going out of your business. While it would be ideal to start using accounting software, such as QuickBooks, the cost may not be in your budget at this time.  So, a simple way to track your finances until then is to create a spreadsheet. This simple tool will help you track every financial transaction and can mean the difference between paying a lot in taxes or significantly reducing the amount owed to the IRS.

Why do you need this system?

Your financial tracking system will answer 3 big questions for you at a glance, How much money did my business earn? Where is my money going? Do I have enough money on hand to run my business, pay myself, and pay my taxes.

How do you set this up?

Step 1: Choose your spreadsheet application

Using a spreadsheet to track your online business income and expenses in the beginning of your online business journey can make it easy for you to calculate exactly how much money is flowing into and out of your business. When choosing a spreadsheet to execute this task, it is important to be able to access your financial reports from anywhere at anytime.

To do this:

1. Create your financial tracking spreadsheet within a cloud storage service (i.e. Google Drive or One Drive).
2. Store the financial tracking spreadsheet in your digital filing system accounting folder

Step 2: Create a profit & loss report and balance sheet

Creating an profit and loss report (aka income report) will give you a clear picture of how much money is flowing into your business and out of your business. Creating a balance sheet within the same spreadsheet will give you a better understanding of how much money you have available to run your business, pay yourself, and your taxes.

Action Item

1. Customize your spreadsheet track each of your sources of income (digital downloads, courses, affiliate income, sponsorships, etc.)
2. Customize your spreadsheet to track which bank or credit card accounts are being impacted by your income, expenses, and payments to yourself

Key Takeaways

Implementing a solid bookkeeping system is crucial for content creators in order to achieve financial stability, reclaim control of their time, and prioritize their mental and physical well-being. By having multiple sources of income and a firm handle on a financially healthy business, creators can reach their ultimate goals and enjoy the benefits of their hard work.

The key to success lies in creating a cash management system that allows for easy allocation of earnings into different financial buckets, ensuring funds are available for business expenses, taxes, personal income, and future savings. Opening multiple business bank accounts and utilizing the Profit First system can greatly assist in managing cash flow effectively.

Additionally, establishing a digital filing system provides a central location for storing important financial documents, making it convenient to access records anytime and anywhere. Utilizing cloud storage services and organizing files into specific folders based on account types and years simplifies financial record retrieval.

To track income and expenses, a financial tracking system is essential. While accounting software like QuickBooks is ideal, starting with a spreadsheet can be a cost-effective alternative. Tracking each income source and assigning them to relevant bank or credit card accounts, along with creating profit and loss reports and balance sheets, helps monitor business growth and financial health.

By implementing these strategies and maintaining a solid bookkeeping system, content creators can achieve financial success, optimize their revenue streams, and enjoy the benefits of a thriving business while simultaneously prioritizing their personal well-being and family stability. With a firm grasp on their finances, content creators can have their cake and eat it too.