Note: This post (along with the free planning playbook has been updated for 2023/2024!
The year is almost over! And - once again - what a HECK of a year it has been y'all.
In the (approximate) words of Smash Mouth - the hits start comin' and they don't stop comin'.
I hope you have some time to enjoy the holiday season. Relaxing with your loved ones AND filling all those holiday orders is no small feat. But here's the thing - year-end doesn't just mean jingle bells and fireworks. It ALSO means it's time to wrap up your financial records and prep for tax season!
Did you just shiver a little bit with anxiety? Got some catching up to do on this topic? It's ok - it's pretty common to procrastinate when it comes to dealing with your biz finances. You aren't alone.
How to Get Your Bookkeeping Caught Up for Tax time - for Etsy & Shopify Sellers
If you need some assistance catching up on your 2023 numbers before the tax deadline (April 15th, 2024), I got you! I've compiled some tips and handy resources to help you go from totally stressed and behind to breathing easy and DONE! The best part is, I specialize in working with makers, handmade sellers, and online creatives just like YOU. So unlike your brother's uncle-in-law's sister, I can actually speak to you as a creative entrepreneur.
Begin with the end goal in mind.
Your 2023 personal and business taxes (for sole props here in the USA) are due on April 15, 2024. Your goal should be to have complete financial records and accurate totals in time to hand over to your tax preparer, or in time to do your taxes yourself (so, try not to plan to be done ON April 15th!).
Let's be clear on what you need as far as "completed financial records" go - I'm talking accurate, detailed totals for all your sales and expenses for the year, with a solid paper trail to substantiate those totals too. I'm not saying you need a balance sheet, cash flow statement, etc. Or a double-entry journal of every transaction ever. Don't make it harder than it has to be.
Start planning now and be realistic with your time.
Most makers will have a shipping cutoff for the holiday season a week or two before Christmas. You can begin wrapping up your books as early as late December (catch up on the early parts of 2023). The earlier you start the more time you'll have to break it down.
Remember, the goal of this exercise is to catch up in the least stressful way possible! That means breaking up ALL the work you need to do in manageable chunks of time. Pencil in a little bit of work each week starting now, and you'll get everything done by your tax deadline. Nobody wants to cram in a year's worth of bookkeeping in a weekend!
That being said...
Write it out.
...Like on paper. If you write out your schedule in advance, you're more likely to stick to it. Plus you'll have a visual reminder of when you've fallen behind. Besides the actual tasks you need to do, my printable planning playbook includes two more tools to help you schedule out your bookkeeping work - a tiny steps daily checklist and blank monthly calendars for December 2023 through April 2024.
The blank monthly calendars will help you visually spread out the work for each week (see my next point), and the tiny steps checklist will encourage you to do just a tiny bit of "catch up" bookkeeping work each day - even if it's just 5 minutes, you're making progress.
If you are more of a digital person, I love using Asana to schedule out tasks like this over time. Braindump your entire list of bookkeeping to do's (I cover that in my next point!) and enter it as an Asana to do list. Then, schedule dates for each and every action item.
Come up with a plan of attack.
Come up with a "catch up" plan that makes the most sense for your work style and your business. Grab the planning playbook to get an idea of what all you may need to catch up on (oftentimes just knowing what work actually needs to be done is half the battle!). Here are a few examples:
- Divvy it up by sales or expense source: Week 1 - enter monthly Etsy sales, Week 2 - enter monthly sales from Amazon, Week 3 - enter everything from your PayPal account, Week 4 - enter all expenses from bank account 1, etc.
- Divvy it up chronologically: Week 1 - enter all sales & expenses from January 2023, Week 2 - enter all sales & expenses from February 2023, etc.
Once you figure out what is easiest for you, line that up with your printed or digital calendar each week so you know exactly what is going to get done when.
Know what to expect.
It's hard to know what you're really doing here if you don't understand where all these numbers are going. Take just an hour or two to review the Schedule C, the tax form where a lot of this info is likely going. I have a handy breakdown of the Schedule C here as well. Understanding this tax form will give you more confidence that you're catching up on the necessary info and not wasting your time worrying about other things.
On that note...
Don't forget about that pesky inventory.
As a maker, dealing with your inventory is likely to be the biggest component of your catch up process. Yet it's a concept a lot of us totally ignore!
First, brush up on how inventory and cost of goods sold work for tax purposes. You might need to catch up on entering all your inventoriable supplies for the year, then do an end of year count to determine your ending inventory amount. If you are behind, make sure you set aside enough time to count, measure, and do a whole lot of data entry.
I've got a free 20-minute video all about year-end inventory work here.
If you're freaking out, I've got two things to help you.
First, I've crafted a handy printable checklist to help you through this process. These worksheets will help you with both the planning phase and the action steps. The bundle includes:
- Action Steps Master Checklist - a list of steps you can follow to go from blank to complete. If you aren't sure where to start, this checklist will definitely guide you and keep you focused.
- Tiny Steps Daily Checklist - this simple checklist encourages you to get just a little bit of work done each day and you will inch your way to progress and completion!
- Blank monthly calendars for December 2023 through April 2024 - schedule out the work over the amount of time you have remaining before the deadline.
With these tools in hand, you get the planning focus and guidance that you need to succeed. To grab your printables, just click here!
Second, if you need some serious hand-holding and help, join me in this year's Bookkeeping Bootcamp.
My course, the 2023 Bite-Sized Bookkeeping Bootcamp, is designed to help you catch up on your 2023 finances in the least stressful way possible. I've broken down everything you need to do to update your books for the entire yer in tiny, itty bitty, doable steps that are actually manageable.
In the Bite-Sized Bookkeeping Bootcamp, I'll walk you through:
- Quickly importing your Etsy or Shopify sales, fees, and expenses for the entire year
- Entering your sales & fees from other sources, like Amazon, Stripe, PayPal, and your bank account
- Compiling & organizing your expenses in such a way as to make entering them as painless as possible
- Dealing with inventory & supplies for tax purposes (and getting your year end count done!)
- Creating final documentation along with a paper trail for tax purposes or to hand over to your accountant
Plus I always explain what you're doing as we go, so you can actually understand and feel good about your accounting & tax requirements.
Learn more about the 2023 Bootcamp here. Doors are open until the end of February each year.