Your Genealogy Business
Tracking money is not just mindless busywork. It has a purpose. Keeping track of money as it flows in and out of your business is a process that is key to providing you with the necessary information on how your business is doing which leads to better decision making. Managing your financial resources will involve the following aspects of money management:
- cash flow
- tax reporting
- break-even analysis
- credit and collections
For a small sole proprietorship, weekly bookkeeping and periodic budgeting can be a simple process, and many small business owners do very well using just a spreadsheet to keep their financial records.
Accounting reports are useful for reporting and planning purposes. The basic financial reports useful to an owner of a small genealogy business include:
- Balance Sheets– This is a very basic look at your business ownership at a particular point in time, usually at the end of each month.
- Profit/Loss Statement– This covers a specific period of time, such as one month, one quarter, or one year.
- Budget– This serves as a guide for your activities.
If you have ever had a month – in business or even in your personal life – when you did not know where you would get the money to pay the bills, you have an understanding of what cash flow is. In a service business such as genealogy research, cash does not always flow smoothly. Genealogy research projects can take extended periods of time, sometimes six months or more.
A significant portion of your income may come from projects that you complete for your clients. In order to be adequately paid for your work, it is necessary to keep whatever records are necessary to enable you to invoice your clients. Depending on how you charge your clients, you may need to keep track of your time and/or expenses, or simply charge per project as you deliver them. When you complete the work, something should trigger you to issue an invoice.
Financial administration involves many aspects of managing money as it comes in and goes out of your business. Through the Business Skills: Business Administration course you will gain a better understanding of the financial matters in your business.