The first day of flu was horrible - fever, aches, nausea, dizziness. The next two days were progressively better, but didn't find me feeling well enough to go sit in the cold wind to weave. I didn't really trust myself to make good decisions at the sewing machine, either. It seemed a better idea to tackle the elephant in the weaving studio: accounting. It's a monotonous task I can do while laying in bed high on DayQuil, and fix progressively if I get it wrong the first time.
When I borrowed money from friends to buy the loom I kept careful records in a paper envelope. Then I bought the loom and started weaving for Annie. Again, I kept other, careful records of our work with a piece of software called Billings. (This is an excellent program, by the way, with a nearly perfect iPhone app that syncs with it.) My expenses usually come at a low volume, so I've been using Mint.com to categorize them as they occur, assuming that this would be useful.
A few weeks ago I sat down to do my taxes and realized that these separate sets of records made it impossible to reconcile them. I had to file for an extension. I knew all along that I should have been using QuickBooks, but never took the time to get it set up, pull all my records into it, and reconcile them.
Well, this illness gave me the chance I needed. I went online and pulled statements for all of my accounts from January 2009 to the present. It's kind of complicated because I have Paypal and Wells Fargo linked. Money is always flowing back and forth between them.
In the end, I got everything but petty cash reconciled with all accounts matching their statement balances TO THE PENNY at the end of every day from January 2009 to today. Yeah! Since I almost never spend cash, it will be easy to reconcile that when I get home to the receipts folder.
[Income and Expenses for a fragile baby business]
Here's one picture of the final result. It's easy to see that 2009 was a tough year. My income was higher than my expenses only 6 out of 12 months. December, the highest volume month for most sales-based businesses, was completely wasted because of a major planning error. 2010 looks better. If I can keep producing and selling like this, I may have finally made it. (Oh, yeah, and I need to get my software addiction under control. 8% is way too much to spend on computer stuff for this particular business.)
["Net Worth", not the same as Self Worth]
Here is another picture: a net worth graph. The red represents money I have yet to pay back from the "Friends' Loom Loan". The green represents mostly assets: equipment, materials, vehicle, etc.
You can see three big dips in my assets last year: quitting my day job to weave fulltime (and the lag before I got paid), visiting Wolf Creek in August, and moving there for real in December. You can also see that I got serious about high volume production in January, after realizing that "lazy" production and poor planning weren't building the business fast enough to be sustainable.
One thing this graph shows is that I'm on the right track! Even though there's still no cash in my pocket, the resources I have at my disposal are increasing. This increases opportunities and will one day (soon) turn into real money.
So, this week was almost a wash in terms of physical productivity, but has seriously enhanced my infrastructure and mental well-being. It's stressful to know that such a big part of your business is inadequately handled!
After finishing the Ren Faire I'll have to hire an accountant to set up a tax-appropriate chart of accounts for my business. Then, I'll recategorize expenses to it and file last year's taxes.
Does anybody know of a good accountant who's familiar with crafts business accounting?