I've never been a math person. I failed math in grade 11, and never looked back. The most complicated math I ever use is to calculate my students' term marks, and for that I use one tried and true formula. I don't really have a household budget, I don't know how to balance a chequebook, and although I have RRSPs, I have no idea how they work. I let the bank manage those for me. This is sheer laziness on my part, because I know if I had any interest in learning about it, I would be able to figure it out. How, then, you may ask, do I manage my small business finances? My accounting methods are similar to those one might have found employed in many frontier general stores in the 1800's. I use a ledger-book type sheet, with six columns--Date, Purchase/Sale, Type of Payment, Amount Debited, Amount Credited, and Balance. When I buy jewellery supplies, office supplies, or pay Etsy fees or craft show fees, I write these amounts in the Debit column. When I make a sale, either on Etsy or at a craft fair or just to a friend, I write these amounts in the Credit column. I keep a running tally of the balance. So far, the Debit column seems to get much more use than the credit column. I keep all receipts for everything I buy for my business, and I write out bills of sale for all my sales. All of these documents are kept neatly in an accordion folder. That's it. That is the extent of my small business accounting practices.
I've read about making a spreadsheet, but I don't know what data I would include. I haven't made a profit thus far, so I don't have a separate business bank account, and since I opened my business in 2010, I have yet to deal with income taxes. As of July 2010, when the HST came into effect, I have opted not to collect HST tax on sales, which, as I understand it, is my prerogative as a small supplier. (A business whose profit is less than $30 000 annually.)
I have secured the name of an accountant who deals with small businesses, and I plan to take my shoebox of receipts and my accordion folder to her this month. I'm a bit nervous about what she (and Revenue Canada) will say about my accounting practices, but at least I'll know better for 2011. I plan to purchase QuickBooks Small Business, and maybe that will help keep things organized in a 21st-century kinda way.
One thing about accounting for a small jewellery business that scares the bejeesus out of me is inventory. How on earth am I supposed to make a comprehensive list of all the thousands of little bits and pieces I have accumulated over the years, much less update the list every time I buy new supplies or use some of them? AAAGGGHHHHH! Is it really necessary? I need a book, written in simple language for the math illiterate, on how to manage accounting for a small, home-based craft business in Canada. It would be really great if the book could be written especially with jewellery designers in mind. Oh, well, wishful thinking.
Anyway, readers, I will let you know how the tax accountant thing goes, and what I learn from her. The late news is predicting a whopper of a snowstorm for the Golden Horseshoe area, the likes of which we haven't seen since 2008. I am off to bed, fingers crossed in the hopes that tomorrow will be a snow day!
This blog is meant to be a record of my adventures as a new home-based business owner. Starting my jewellery business was one of the most daunting things I've ever done, next to giving birth. Especially since I was (am?) pretty technically stunted. In this blog I will describe the trials, tribulations and, hopefully, eventual successes I experience while navigating the world of (really, really, really small) business. I also plan to use this blog to talk about all the aspects of jewellery design that fascinate me, keep me addicted, and cause me to spend thousands of dollars (What, honey? No, I didn't say thousands...) on gemstones, beads, findings, etc. I welcome your input, ideas, and stories of similar experiences in beading, jewellery design, or running a handcrafts business.