accounting for small business creative entrepeneurship
Creative Entrepeneurship


Of all the challenging things that come with running a business, the one that has given me the most headache and frustration is unquestionably the unalterable, inalienable reality that I must keep track of financial information. I’ve had a few private, pathetic tantrums, cried at least once on the phone with my accountant (let’s be honest – it was probably closer to thrice), and experimented with a stupid amount of systems before I found one that works for me. This from the woman who almost failed grade 9 math because she was too busy reading novels during class. If a numbers-dyslexic person like me can figure it out, so can you. You just need to find your system, along with a little practice and some patience with yourself when you’re trying to figure it all out. The brutal truth is that as much as this part sucks, it’s also really, really important. So if you want to be in business for yourself, you just have to deal with the fact that accounting is now a part of your life, whether you like it or not (this is something I have angrily whispered to myself on more than one occasion).


Bare bones, brass tacks? This is what you need to be tracking.

  1. Sales. While this sounds obvious, make sure you’re clocking everything that comes in, especially if you have a diverse revenue stream. If you’re selling products, you should be able to monitor sales of each individual item so you can track what is selling and what isn’t. If you’re an invoice based business, you need to ensure that your customers are actually paying your fees on time, and that you’re capturing and recording those sales accurately.
  2. Cost of goods sold. If you create a product and keep an inventory, it is critical that you are keeping track of the cost of that inventory month by month.
  3. Expenses. These are costs not directly related to your product, but more widely include your general business expenses like rent, gas, phone, business insurance, professional fees, office supplies, etc.

Now, how to track this data? If you’re only working part time on your business, or your financial transactions are relatively simple, I think you can probably get away with using a robust series of spreadsheets to track your income. The first spreadsheet is called an Income Statement. It tracks your sales (both inventory and non-inventory) vs. your cost of goods sold (the actual price YOU pay for your inventory) vs. your expenses (rent, supplies, wages, etc etc.) It takes your sales and subtracts your cost of goods sold to get your Gross Profit. It then deducts all your expenses from the gross to generate your Net Profit. Here is an example using a generic business.

Income Statement spreadsheet

Hand in hand with your income statement, you’ll want to maintain a Cash Flow Statement. It tracks a lot of the same information as above, but what it’s truly looking at is how much money is coming in (inflows) vs. how much is going out (outflows) each month. While it is permissible to have months when you have more going out than in (for example, if you just purchased a lot of inventory), your total cash balance should always be positive. Meaning, you should always have enough money in your business account to cover your outflow needs. As you can see below, even though there are months where outflows are greater than inflows, the Closing Cash is always in the positive. This is what you want.

Cash Flow spreadsheet

Lastly, you’ll want to keep a Balance Sheet, which more or less summarizes all of the above information and gives you a snapshot of the health of your business at any given time. It’s a little tricky to put in my own words, so I’ll leave it to Wikipedia: “Another way to look at the balance sheet equation is that total assets equals liabilities plus owner’s equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner’s money (owner’s or shareholders’ equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections ‘balancing’.” You can read more about balance sheets here.

balance sheet

If you’re confused and want to punch me right now, I’m sorry. In apology, I’ve created a generic “Financial Business Statement” Excel template for you. It includes a linked Income Statement, Cash Flow and Balance Statement, all with formulas, so you should be able to plunk in your own data without a problem (this file will also open in Google Docs if you don’t have Excel).

All this said, if your business is tracking income from multiple sources, you need to send a lot of invoices, or the process feels in any way complicated or overwhelming to you, I highly suggest investing in an accounting program. Choosing the right software not only standardizes a pretty important part of your business, but it will also help you generate all the above reports and statements automatically. I have a lot to say about accounting programs since it seems like I have tried ALL of them, so stay tuned for a future post about choosing the right app for your business.


Every business, no matter how small, should be consulting with an accountant, even if it’s only once a year around tax-time. We can’t know everything, and even if your accountant is expensive, it will save you time and money down the road to have someone in your corner who can help you navigate the thornier elements of being a business owner, like taxes (collective groan), and when it’s time to start thinking about incorporating your business. If you REALLY hate accounting, and you have the money, you can also think about hiring a bookkeeper. Bookkeepers will likely charge a lower hourly rate than an accountant since they are not professionally certified and may not have gone to school specifically for accounting. They will help you input all your day to day transactions and make sure your books and accounts are in good working order. If you can’t find anyone locally (check references and get someone trustworthy!) there are also online services like

All that said, as my accountant told me this year, “At this stage in the game, no one should know more about your business than you”. Even though  accounting is my least favourite part of running this business that I love, I do like having a micro AND macro view of what I’m working towards. I feel like I am more conscious of my spending when I have to manually enter all my expenses, and I have a deeper understanding of what is going on in any given month because I am  entering all the numbers myself. I still have my accountant come in every few months to make sure the boat is on course, but it’s really satisfying to know that even though I blew it at grade 9 math, I can totally handle my financial game as an adult.


  1. Make a monthly appointment with your business to go over your financials. Don’t make excuses. This is an important date and it needs to be a part of your schedule and routine.
  2. Keep a task list to remind yourself what needs to get done each month. It should include: entering sales (either manually or automatically depending on your system), cataloging expenses, reconciling bank and credit card statements, sending and collecting on invoices, putting aside money for taxes, reviewing shipping costs vs. what you’re charging customers etc etc etc.
  3. Keep track of ALL of your expenses. This includes meals and drinks when you talk about business, trips that involve any networking or purchasing, and anything unique to your business. For example, I can write off things like shoes and make-up since I use them for photo-shoots. Talk to your accountant if you’re unsure about whether something counts, and write notes on all of your receipts in case you have to explain it down the road.
  4. Keep a separate business bank account. This is SO important. It is basically impossible to keep good books if all of your business stuff is mixed up with your personal. If your business is small-time or run under your own name, you can even use a low-fee personal account rather than spending money on ridiculous business banking rates. I use Tangerine in Canada which offers free chequing accounts (incidentally, they’ll give you a $50 bonus if you sign up with them using the key #41402663S1)
  5. In the same vein, keep a separate business credit card that you use just for expenses. This makes keeping track of expenses even easier since you can cross check everything against your statement and make sure you didn’t let anything slip past. I’m paying a small annual fee for an air miles card which will hopefully pay for a flight or two every year. Just make sure you just pay off your balance each month!
  6. If you’re not very good with keeping track of cash expenses, take photos of your receipts. Some cloud accounting software solutions have this functionality built into their apps. I use Evernote and love it.
  7. Learn the sales tax regulations for your state/province or country. You may have not have to register for regional or national taxes if your sales fall within an income limit. Since collecting and paying taxes is a pain in the butt, don’t start doing it until you have to. This is something to discuss with you accountant!
  8. Learn how to use Excel. It sounds so silly, but learning some basic formulas and how to link data from one sheet to another is insanely helpful. And weirdly fun once you get the hang of it.
  9. Set aside money for taxes every month. I try to sock away at least 30%, just so I don’t get screwed at tax time.
  10. Review your invoices each month to ensure they’re being paid on time. Keep in mind that late payments are basically a no-interest loan. Have a strategy in place for capturing late-paying clients.
  11. Keep that cash flow positive! If you’re in the red, it’s time to start reducing expenses or reevaluating your business. Do not go into personal debt to keep yourself a float if you can possibly avoid it.
  12. While it may be tempting to treat your business like a piggy-bank, it’s smart to pay yourself a reasonable monthly salary that is more or less consistent from month to month. If you’re making more than that, WONDERFUL! But if you’re smart you’ll make an effort to save or reinvest that money in your business since there is no guarantee or true stability when you’re self-employed. Have a safety net, whenever possible.

Whew. That’s a lot of ground to cover in one blog post but I hope some of you out there found it helpful! I’m finding these posts to be really helpful to me, since it’s forcing me to write down and quantify what I’ve learned over the last year. Any other tips or tricks you can suggest? I’d love to hear what your accounting rituals are.

This post is part of Make Boss, a new blog series exploring the day-to-day realities of creative entrepreneurship. If you liked this post, you may also enjoy Tips for Transitioning to Full-Time Creative.