AI Quick Tips 71: Create a system to track your business finances

What do you mean you don’t track your finances?

How do you know how much money you’ve made?  Have you brought in more money than it costs to run your business (aka, are you profitable?)  How many customers have you had?  How can you do your taxes?

Okay, everyone keeps telling you that you have to track things, but you don’t know the first thing about what to do.  And you don’t want to pay someone to do it (you don’t even know if you could afford it…)

You can get started with an AI tool like ChatGPT.  

It won’t be perfect and will miss things that you should be tracking.  It is way better than doing nothing though.

You can even use a short and simple prompt.  Here’s a template -

How can I set up an accounting system in {tool that you have access to} for my {type of business} business?

Here’s a real example -

How can I set up an accounting system in Excel for my photography business?

The output was pretty good -

A Step-by-Step Guide to Setting Up an Accounting System in Excel for a Photography Business

Setting up an accounting system in Excel for a photography business involves creating a set of spreadsheets to track income, expenses, and overall financial performance. Here's a step-by-step guide to help you get started:

1. Create a New Workbook Open Excel and create a new workbook. You'll want to set up multiple sheets to manage different aspects of your accounting.

2. Set Up Your Sheets You'll typically need the following sheets:

• Income Tracker

• Expense Tracker

• Profit and Loss Statement

• Invoice Template

• Client List

3. Income Tracker

1. Create Columns:

   • Date: When the income was received.

   • Client: Name of the client or project.

   • Description: Brief description of the service or product sold.

   • Amount: Total income received.

   • Payment Method: Cash, credit card, bank transfer, etc.

   • Invoice Number: Reference to your invoice (if applicable).

2. Add Formulas:

   • At the bottom of the Amount column, use the SUM function to calculate the total income.

   • =SUM(D2:D100)

4. Expense Tracker

1. Create Columns:

   • Date: When the expense was incurred.

   • Category: Type of expense (e.g., equipment, travel, marketing).

   • Description: Brief description of the expense.

   • Amount: Total expense amount.

   • Payment Method: Cash, credit card, etc.

2. Add Formulas:

   • At the bottom of the Amount column, use the SUM function to calculate the total expenses.

   • =SUM(D2:D100)

5. Profit and Loss Statement

1. Create Columns:

   • Description: Income and expense categories.

   • Amount: Values from your Income and Expense sheets.

2. Input Data:

   • Pull total income from the Income Tracker sheet.

   • Pull total expenses from the Expense Tracker sheet.

3. Calculate Profit:

   • Total Income: Reference from Income Tracker.

   • Total Expenses: Reference from Expense Tracker.

   • Net Profit:

   • =Total Income - Total Expenses

6. Invoice Template

1. Create Columns:

   • Invoice Number

   • Date

   • Client Name

   • Description of Services

   • Amount Due

   • Payment Terms

2. Format:

   • Include your business logo, contact details, and payment instructions.

   • Use Excel's formatting options to create a professional look.

7. Client List

1. Create Columns:

   • Client Name

   • Contact Information

   • Project Description

   • Invoice Status: Paid, Unpaid, etc.

2. Update Regularly:

   • Maintain and update this list as you gain new clients and complete projects.

8. Automation and Regular Maintenance

1. Automate Calculations:

   • Use Excel's built-in functions and formulas to automate as much as possible.

   • Consider setting up pivot tables or charts for visual analysis.

2. Update Regularly:

   • Enter data frequently to ensure accuracy and up-to-date financial information.

   • Review and reconcile your sheets monthly.

9. Backup and Security

• Backup: Regularly save and back up your Excel file to avoid data loss.

• Security: Consider password-protecting the workbook to safeguard sensitive financial information.

By setting up these sheets and maintaining them regularly, you'll have a solid accounting system in place to track the financial health of your photography business.

Yes, I know.  It is missing a balance sheet and a cash flow statement, and a …

All of those can be added later,  

If you started with nothing, this is a solid start and, unfortunately, a lot more than a lot of people have set up.

Now go make some money and record it in your new accounting system.

Don't feel like setting up your own template?  Here's one to get you started.  Free download below.