In today’s episode of The Render Podcast, we are starting our Finance Series! We are going to talk about what may feel uncomfortable — your finances and all of the things that come with that. This series comes at the perfect time being it is now tax season, and starting a new year. We hope today’s episode will inspire you to jump on having your money organized and structured if you do not already.
This series is going to be a more educational approach, broken down into different mini-episode styles with each one covering a different topic from before or the next. Make sure you follow along as it will make better sense to have all of the pieces when it comes to your business finances. We cannot wait for you to join us!
Before we jump into the terms to know within your business, let us just say that we have been there with every ‘number stage’ aspect of a business. With time well spent invested in conferences, picking the brains of other entrepreneurs, and more, to figure it all out. The reality of all of this is we have to take our numbers seriously because if we don’t, it fast tracks to a place of failure, exhaustion, and stress, and will make you feel like you don’t know the answer or how to move forward.
To jumpstart what we will be talking about in the weeks ahead, we are going to go over and share some terms with you that will equip you better when we are talking about these things.
— Revenue: interchangeable with income, this term is a way to look at the money coming into your business.
— Income: interchangeable with revenue, this term is a way to look at the money that is coming into your business.
— Expenses: costs of your business expenses and costs going out to run your business (softwares, mortgages, etc.).
— Cost of Goods Sold (COGS): if you have to purchase something for a specific event to produce that event, that goes under COGS.
— Assets: this is something that you purchase for your business that you can continue making money from. Examples of this are your inventory,
— Profit and Loss (P+L): the health status of your company, you should be pulling these often to check in on your business.
— Cash Flow: think of your cash flow like an ocean, you are going to have a tide coming in (your revenue) and coming out (your expenses).
— Accounts Receivable (AR): this means that you have booked business and now you can expect revenue from that job.
— Accounts Payable (AP): this means that we have an invoice for this ‘thing’ that we have to pay.
— Cash Accounting: when you receive cash in your business, means you now pay tax on that when you receive it.
— Accrual Accounting: if you do business with accrual accounting, you are not going to receive that money until a certain time frame has passed. Typically businesses with refund policy do accrual accounting.
— Balance Sheet: the health status on your accounts that you have. This is a balance sheet at what you have at a high level in your checking account, credit cards, etc.
— Chart of Accounts: the different categories, or folders, that you are going to put all of your revenue and expenses into. For example, some categories could be Rent of Warehouse, Utilities, Wages, etc.
— Gross vs Net: You will see this on your Profit and Loss Report. You can see your gross revenue, your net revenue, your gross expenses, and your net expenses.
— Liabilities (Required to pay at a later date or on a schedule – accounts payable, wages, taxes, rent/mortgage, and accrued expenses)
A quick tip from us at Render — while spreadsheets are great for analyzing your numbers, looking at profitability, and the data that comes with that, you really should be using software to run your numbers. However, when it comes to needing to categorize the revenue, your expenses, etc., it is super helpful to have software doing all of that busy work for you. We use GoodShuffle Pro for sending out invoices and contracts, and we simultaneously use Quickbooks Online for keeping track of the numbers.
The great thing about these two software is that they integrate with one another and when we receive payment through GoodShuffle, that money is automatically categorized into where and how it needs to be within our Quickbooks Online system and saves us one less thing to worry about. If you have not already, check out GoodShuffle and Quickbooks Online to save you time in your business.
As always, we are so grateful that you are here and a part of our Render Community. We hope you have enjoyed this introduction into our Finance Series and we look forward to having you back for next week’s episode!
Raven Scott | Podcast Manager
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