You've had a great month in sales. Revenue is coming in, clients are paying, and your business looks like it's doing pretty well. Wooooo! 🙌
So why does your bank account look like you barely made a dime? Boo….
You start wondering where it all went.
It's frustrating. It can even feel embarrassing. You thought you were doing well financially, so why does it feel like you're constantly scrambling to find money?
Here's the thing: bringing in revenue and having cash available are two different things. When you're busy delivering services, managing clients, and trying to grow your business, it's easy to lose track of how those two things connect.
Most business owners don't start a business because they're excited to manage spreadsheets and review bank transactions. You're focused on serving your clients, bringing in sales, and keeping everything running. Bookkeeping often gets pushed to the bottom of the to-do list because, let's face it, it doesn't bring in leads or generate sales.
But ignoring your finances doesn't make the problem go away. It just makes it harder to see what's happening until you really need that information.
The good news? You don't have to become a financial expert to get a better handle on your business finances.
With three practical strategies, you can start understanding where your money is going, make more intentional spending decisions, and get a clearer picture of what your business can actually afford.
Let's dig in!
1. Know Your Recurring Expenses
When was the last time you looked at all the expenses your business pays every month?
I'm not just talking about the obvious ones, like insurance or contractor payments. I'm talking about the automatic $15 software subscription you signed up for six months ago, the annual membership you forgot was renewing, and the tool you bought for a project you no longer work on.
Individually, these expenses might not seem like a big deal. But together? They can take a surprising bite out of your available cash.
Start by figuring out what you're paying for
Pull up your business bank and credit card transactions and make a list of your recurring expenses.
Include things like:
Software subscriptions and online tools
Business insurance
Contractor payments
Professional memberships
Website hosting and other business services
Monthly loan payments and other regular financial commitments
Annual renewals and fees
Then look at each expense and ask yourself three questions.
Am I still using this? If you're paying for software you haven't opened in months, it's worth asking whether you still need it. The same goes for memberships, services, and tools you signed up for with good intentions but never actually used.
Is this helping my business right now? Some expenses are essential, even if you don't use them every day. Others might have made sense when your business was at a different stage but aren't as useful anymore.
Could I be putting this money to better use? Maybe that $40 monthly subscription would be better spent on contractor support. Maybe you're paying for two tools that do essentially the same thing.
The point isn't to cut every expense you can find. It's to make sure your spending reflects what your business actually needs.
2. Take a Closer Look at Personal Spending and Owner Withdrawals
When sales are good, it's natural to feel like you can afford to pay yourself more. You've worked hard. Your clients are happily paying you. You deserve to reap the rewards of running your own business.
But here's where things can get tricky: money coming into your business isn't automatically money available for you to spend personally.
A portion of that money is what your business needs to cover operating expenses, taxes, and other financial commitments. If you withdraw more money than the business can comfortably spare, you might find yourself short on cash later.
Find out how much money you're taking out
Start by reviewing your business bank and credit card transactions for personal purchases and transfers to yourself.
Maybe you've been paying for groceries with your business debit card. Perhaps you've been transferring money to yourself whenever the bank balance looks healthy. Or maybe you use payment apps like Venmo or PayPal for both personal and business transactions, making it harder to tell what belongs where.
These things happen.
The important thing is to identify these transactions so they can be recorded correctly in your books historically and going forward.
Personal purchases correctly recorded can help explain why your bank balance and the profit shown in your reports don't always look the same.
Create a clearer picture of what you're paying yourself
Once you've identified your withdrawals and personal purchases, look at the bigger picture. For example:
How much money have you transferred to yourself over the past few months?
Are you making frequent withdrawals without considering the bills that still need to be paid?
Have personal purchases been mixed in with business expenses?
You don't need to judge yourself for what you find. The goal is simply to understand what's been happening.
Going forward, consider establishing a regular routine for paying yourself. Depending on your business structure, that might mean setting a consistent owner-draw schedule or establishing a payroll routine.
Before transferring money, take a moment to review your available cash, upcoming bills, and tax obligations. This can help you make a more informed decision about what you can reasonably take out.
3. Remember That a Business Expense Still Costs You Money
Have you ever bought something for your business because someone told you it was a tax write-off?
Maybe you thought, "I could use a new laptop, and if it's deductible, I might as well buy it now."
It's a common way to think about business purchases. But there's an important detail that can make a big difference when you're trying to figure out where your money went.
A tax deduction doesn't mean a purchase is free.
Legitimate business expenses may reduce your taxable income, depending on the applicable tax rules. But that doesn't mean the government reimburses you for the full amount you spent. (Boo, lame.)
For example, if you spend $100 on a deductible business expense, you've still spent $100. The purchase might reduce your tax bill, but it doesn't put that $100 back into your bank account.
Look at what you're actually spending
Take a look at some of your recent business purchases. Are there items you bought because they seemed like a good deal or because you thought they would reduce your taxes?
You don't need to second-guess every purchase. There are plenty of expenses that are necessary to run a business.
The goal is to understand the difference between spending money because your business needs it and spending money just because you think you’re getting the tax deduction bargain deal.
What If You Don't Know Where to Start?
You might be wondering, "Okay, this all makes sense, but how am I supposed to figure any of this out when my books are already a mess?"
Maybe you haven't reconciled your accounts in months. Maybe you've been mixing personal and business purchases. Or maybe you're looking at your bank balance right now and realizing you have no idea how your business got here.
If that's you, take a breath.
You're not the only one.
Everyone gets busy, especially when you're the person responsible for pretty much everything in your business.
And when you finally have a spare hour, the last thing you want to do is stare at a bunch of numbers you don't understand.
You don't have to fix everything in one afternoon, and you don't have to understand every financial report before asking for help.
Start by gathering your records and getting a clearer picture of where things stand. If your books are behind, getting them up to date is a practical first step.
You might discover that your business is in better shape than you feared. Or you might uncover forgotten subscriptions, personal spending that's been recorded incorrectly, or expenses that deserve a closer look.
Either way, knowing the truth gives you something valuable: a place to start.
Getting a Clearer Picture of Your Business Finances
By now, you might be thinking, "This all makes sense, but I don't have time to keep track of every transaction, review all my expenses, and figure out what my financial reports mean!"
And that's exactly why having the right tools and support matters.
Spend less time hunting down transactions
Xero can connect to supported business bank accounts through bank feeds, automatically importing transaction information into your bookkeeping software. No more manual BS !
Once your transactions flow into Xero, they can be reviewed, matched, and categorized as part of your bookkeeping process. Some transactions may still need additional attention, but having the information flow into one place can make keeping track of your finances much more manageable.
It's also helpful to have a clear separation between your business and personal finances. Using your business accounts for business transactions—and keeping personal transactions separate—makes it easier to understand what's happening without having to untangle a mix of purchases and transfers.
Get more than someone who simply categorizes transactions
Bookkeeping isn't just about putting transactions into the right categories. It's also about helping you create a process that makes managing your finances easier.
I'll help you look at how you're currently handling your business finances and identify opportunities to simplify things.
That might mean finding better ways to receive client payments, separating business and personal spending, connecting eligible bank accounts to Xero, or establishing a consistent routine for keeping your records organized.
Once your books are cleaned up, you'll have a much better starting point for understanding your expenses, reviewing your owner withdrawals, and spotting patterns in your spending.
Instead of guessing where your money went, you'll have organized records and reports you can use to see what happened.
You don't just need bookkeeping that's done. You need a financial process that works for you and numbers you can actually use.
Ready to Get Your Books Done Right?
Making money in your business is exciting. Feeling like you have no idea where it all went with no time to figure it out? Not so much.
You could keep trying to piece together months (or even years!) of transactions yourself… Or you could hire a bookkeeper who knows how to sort through the details, get your records in order, and make sure everything is where it belongs.
(That's me! đź‘‹)
When you hire me for my Catch-Up Bookkeeping service, here's what you get:
✔️ Your transactions organized. I'll sort your income and expenses into the right categories and set things up to make bookkeeping easier going forward.
✔️ Your accounts checked and balanced. I'll make sure your bank and credit card balances match your records, check for missing or duplicate transactions, and compare your books with your most recent business tax return when applicable.
✔️ Reports that make sense. You'll get reports that show how much your business brought in, where your money went, what you own and owe, and how your cash has changed.
If your books are behind, your bank balance doesn't make sense, or you're tired of feeling stressed every time you check your business account, I'd love to help.
→ Book a call with me to talk about getting your books caught up.
No more guessing where your money went. Let's get you the clarity and confidence to make your next business decision.
