Bookkeeping Practices for Digital Marketers
It’s no secret that digital marketers and online marketing agencies give out tons of advice to business owners. Things like open rates, lead generation, conversion, and retention are all part of the lifeblood that business depend on to service and digital marketers deal in these everyday.
We’re going to return the favor by discussing how digital marketers – and nearly any other online business – can keep their books up to date, project cashflows, and better understand growth trends in their company… and how those same Digital Marketers and business owners can save money with bookkeeping. After all, marketing is all about increasing sales and client counts, right? When you grow, you MUST understand how that growth is affecting your tax liabilities, your overhead, and your ability to effectively manage your business.
The Number One Question…
…Digital Marketing firms ask us when they inquire about our services is ALWAYS, “What is the value of having BookkeepWithUs handle my monthly bookkeeping needs?” In our experience, this same question is asked by many companies that we serve in the online realm.
After all, there is a ton of bad information available online that leads many companies to make poor financial decisions. It comes down to a different perspective of value and really begins with how many online companies were originally organized. Think about it – many digital marketing firms grew from a truly small business with one “solopreneur” at the helm, who then brought on a contractor here, an administrative assistant there, perhaps an overseas programmer. In short, a lot of the advice that more traditional business systems would need from day one are missing in the organic growth of a digital marketing agency – or an online retailer with a Shopify website, for example.
So, Is Professional Bookkeeping Really Worth It?
In one word, “YES!” No matter how you do business in the United States, the fact is, you still do business. As a result, you have a tax liability. What that will be, of course, can be dictated by how your company is structured, but remember, ANY income is reportable to the IRS and your state agency.
For a smaller business planning to scale and grow, proper documentation is critical to understanding cashflow, but also, even more critically, it allows the owner the ability to seek financing – bank loans, lines of credit, even healthcare.
When we can sit down with an owner or managing partner and tell them that their taxes will be ready to file on the first of the year, that may be enough for some, but these additional benefits, in our experience, are often more important for many owners.
On the other hand, let’s talk about the real benefits – any established business needs to know what their cashflow is – especially items like Accounts Payable and Accounts Receivable.
Remember, if you ever have any desire to sell your company, a potential buyer will want a detailed cashflow history – in many cases, years of financials – and when you can produce those, it gives another indication of the legitimacy of your company.
At the same time, bookkeeping is far more than simply helping you to file taxes. Think about the many metrics of a business:
What are your business spending habits? Positive or negative?
Tracking income and expenses by customer to see if you clearly show how much the company is netting per customer on a monthly basis.
Running horizontal and vertical analysis to see the progress of the business monthly, quarterly and annually.
Keeping a transaction detail to help you track any missing monies.
And, of course, being able to successfully weather an audit by the IRS or state agencies.
Let’s Talk About Best Practices
First of all, there’s no better system to use for your bookkeeping than QuickBooks Online. It is the premier system and control the vast majority of the market for businesses – we ALWAYS recommend it to our clients and Digital Marketing Agencies are no different. Thousands of companies agree - It’s affordable, compatible, and always improving the features for your particular industry.
Many, if not all, Digital Marketers love automation, and QuickBooks does, too. Once you have successfully loaded QuickBooks Online, there are some specific steps you need to take to begin to realize its full potential:
Sync your bank accounts
Sync your merchant accounts
Sync your credit card accounts
Set up all of your invoicing to be sent to your clients through your QuickBooks Online account
Match your Invoices to each corresponding deposit in order to keep track of your Accounts Receivable properly.
In the end, what you’ve just done is to make documentation of your business cashflow in and out of your Digital agency LOADS easier.
Now, Let’s Save Some Money!
Have all your clients fill out ACH (Automated Clearing House) forms to avoid merchant fees. This is simply an automated draft where your recurring clients will authorize your company to draft their payments out of a certain account each month. Why? Here’s an example:
On average, merchant fees – the fees charged by credit card companies on transactions – are roughly 3%. That may sound like nothing big, but it adds up – 3% on $20,000 is $600. Wouldn’t it be nice to apply that money to business overhead or other business needs rather than paying someone to make money?
Think of this as an immediate way to increase your profit margin!
Next, take a long look at your financial statements and perform a cost analysis to see if you’re actually selling your services for a profit. Sound crazy? You’d be surprised how many businesses we have seen that are selling at really high volumes but don’t have a good profit margin. Hidden costs like commissions, software, and even the amount of time that owners are spending on production can all mean that high volume may disguise low profits. Thankfully we try to let our clients know if we see trends like this.
Starting Your Own Bookkeeping Regimen
Establishing a process for bookkeeping is just as important as establishing a customer acquisition plan. Think about it - you won’t see your business truly succeed if you have one without the other.
Here’s our recommendation – break down the process into smaller, manageable chunks! Think in terms of handling a certain number of bookkeeping tasks each day, or dedicate a certain day of the week (and time) to handle these tasks. The regiment can be 10 minutes per day or one hour a week or 4 hours a month. Just make sure you start one and stick to it.
In our experience, we spend on average of 4 to 6 hours a month per client. Sure, we’re experts, but once the initial workload is sorted out, we find that even novices can use that as a guideline AND still provide plenty of time to run your business.
Is There an Easier Way?
As a matter of fact, there is. BookkeepWithUs. We designed our company from the ground up to take all the mundane tasks of handling the books in any company, but especially digital services and online businesses. The result? Clear, easy-to-understand financials, clear documentation of cashflows, and advice from a team of highly skilled professionals – at a fraction of the price that many “brick-and-mortar” bookkeepers would charge.
So, if you have an online business, we’d love to show you how easy it is to not only get “caught up” but also to STAY caught up. Reach out to us and let’s have a conversation about how easy we make it.
By: Chris Groote
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