ETSY BOOK KEEPING & FINANCES | Taxes, savings & investing

hello guys let's talk about finances hello guys welcome back to my channel yes we're going to be finally talking about finances in this video now I have been put in this video are for such a long time because as a career is the financial aspect of the business is definitely not my strong point and I'm now hired an accountant just not all of that good stuff out for me but for the first two years I did all my bookkeeping and financing myself and you guys keep asking me how I did it and how I kind of kicked my finances in check what I did and all the bookkeeping side of things like tax and stuff like that so I'm gonna be running through the basics with you I again I'm not a financial adviser but this is just my experiences with financing definitely speak to a financial adviser if you want any financial advice or anything like that because this girl over here is not the one for it but you guys kept requesting it so here I am with a little finance in video on how I basically plugged my finances from my Etsy business I also wanted to say huge thank-you disclosure the sponsor in this video today if you are interested in financing and business financing they actually have tons of online classes about finances personal finance business finance and all that good stuff to help you guys out so definitely go check them out they're an online learning platform with hundreds of classes maybe you don't want to know about financing which is absolutely fine but well then why the heck you on this video so I got some great classes on things like art illustration even however in the next e-business I'm things like that and they are offering you guys two months free if he used a link in my description below so definitely check out take advantage of those free classes that are available to you so thank you so much school chef now let's get into it and the first thing I want to seek her out in this video is capital now what I mean by capital is basically just money that you're going to invest in to your business when I first started out I had zero capital and I only raised capital through myself so I didn't actually go out and get along I definitely advise against that especially if it's a small handmade business I personally did not take out anyone's all because I want it to be totally debt-free in my business as much as that could be apart from the rent of this office and stuff so I raised the capital myself and I raised my own money to put into my products so the first thing I ever did when I first started catnip was I started selling custom portraits and I remember the first ever party that I sold I didn't even have a printer at the time I advertised it and with the money that took up front for that party and the invoice I went out the same night that's that invoice cleared and I bought a napkin printer from the commission money and I also invested a little bit of my own personal savings in to that printer so I had a printer and I had the packing supplies so you will need to obviously where it's some sockets or to invest it up from any business unless you're selling digital products which is absolutely fantastic cuz you barely need to invest anything apart from maybe a 20 cent listing fee on your website fee but you'll always need some sort of setup fee when starting out in business and it's just buying the products in and things like that but obviously if you sell digital downloads and stuff you'll have to feed after website stuff so you need to figure out where you're getting your capital from and maybe you learned enough a friend or family but again I wouldn't advise this try and save up a little bit of money from your own job that's what I did I had a full time job and I invested a little money I had to start catnip and the first thing I ever bought catnip was a printer and then I bought tissue paper and packaging surprise so yeah and I didn't used to buying both you know it's very early days because I didn't know how well it was going to do so I suggest buy 10 sheets of white tissue paper which lasted me about five weeks in the beginning now I have to order in the thousand spawn at first I didn't have to how are you going to raise your first bit of money to invest into the business you need to figure that out by yourself I would highly recommend you try and from your own personal money rather than getting lawns I feel like getting yourself in depth is just not a good idea when setting out a small business and yeah would not recommend the next thing is your products and how much your products are going to make in terms of profit you need to figure out what you're gonna sell and how are you gonna sell it and what profit margin see we're gonna make there's some tools and resources online just Google profit margins and how to work out how much you should be selling your item remember you can always adjust this as you go out and you get experience I always change my product prices as I've kind of moved on some things I've made cheaper as I've been able to make in bulk and I can now offer them at cheaper prices and some I have raised the prices and you can always adapt and adjust these prices over time I just wouldn't recommend it just in prices every week because customers won't know what to expect I do try and recommend that you up date your prices every year or every six months depending on inflation and things like that because obviously minimum wage goes up and everything else goes up you can also make sure that you're making a good profit on your items and stuff so you need to work out what products you gonna sell and how much profit you're actually gonna make and if you're gonna make a profit at all this is vital before you invest any money into anything make sure that you are going to be making a profit and this isn't just about your product this is including your shipping materials and everything like that if you only make fifty P on an item but your shipping costs fifty P you are making nothing on the item and yeah so definitely take you profit into consideration and try and work out how much your profit margins are for each item and make sure that you are going to have enough after the shipping and handling and everything like that which brings me on to my next bit which is expenses now expenses other things that you spend on your business so basically if I am buying some bubble mailers for example they are an expense on my business or if you're a sole trader which I was too sir they would be an expense this also goes for your product items so say you want to sell bookmarks for example your expenses will be the materials for those bookmarks knowing your expenses no new product profit is gonna be extremely important for the next step which is bookkeeping you should try and keep a record of everything you spend on your business you should keep receipts invoices and anything at all that proves that you have purchased the item for your business now my bookkeeping and especially in the early days was through QuickBooks and I'm still using QuickBooks now and I found its taught invaluable because I am not the greatest at finance guys why I'm making the finance video I don't know but I use QuickBooks and they were absolutely amazing and I signed up for that QuickBooks self-employed because here in the UK you can set up as different things and I settle just as a sole trader to start with I am now a limited company and a sole trader but we'll go more into that in depth later on and why I did it later on in this video I needed to keep my expenses and my profits all in one neat place and basically what I did is I have folders like these and these are just different years that have been in trade for and these are all my receipts and things so things like postage receipts you really want to keep a hold of them because that will show the taxman when you come to file in your tax return that if they ever knock on your door checking out these books and stuff that it all kind of adds up and everything is hunky-dory because you have those receipts there's no point having expenses out on your account if you can't prove what those expenses were so this is where these folders come in handy so each one of these folders it's just a different year and a different texture and what I did was I basically had plastic wallets and you can get these dividers to divide by month so you could write January February March April May June whatever and to saw it was easier to file so it was all nice and neat and organized and you just put your receipts in the corresponding months that you purchased the item so any invoices and stuff print them out and put them in here the good thing QuickBooks is you don't actually have to print out all the invoices especially if you're buying online an invoice it's just a business receipt you can actually attach a PDF to that transaction because it automatically pulls through to QuickBooks when you link your bank account to it and when you link your Etsy soft cuz QuickBooks have an amazing result where you can link your Etsy store to your QuickBooks account and it automatically takes in all your transactions which is absolutely fantastic and then at the end of the year you can print out all the Etsy transactions and put them into a little folder here just called Etsy transactions and basically all I have is a wallet for each month of my receipts and just pop all the receipts in each corresponding month and it keeps them all nice and neat and organized in case the taxman ever wanted to check through all my receipts and everything to make sure that everything matched up on my tax return so the bookkeeping you just need to make sure that you are keeping track of your expenditure and you are keeping receipts on everything you have spent for the business things like computers and anything like that would go down as an expense and QuickBooks is amazing because it puts in all your transactions you link up your bank account can even link up your Etsy and Shopify and it brings in all these transactions automatically I also use PayPal and PayPal invoices at the beginning and you just swipe and click business transaction and if you've been using your card and haven't got a separate card for business which is what I had at the beginning hours your shoes in my personal account as a sole trader in my first few years I've only just went into my own business account I would use my normal cat and all the transactions even personal transactions would come in to QuickBooks and I would just have to select them and make sure I ticked personal for those accounts so it wasn't affecting the business accounts for the tax return it's that make sense some people would choose to use Excel but I just personally have only used QuickBooks because I found it so if you see and it just did it all for me it brought in my bank transactions automatically and everything the thing was writing down your own you would not have those personal transactions medivh you would just write down your income and expenditure which might be more handy if you prefer to be a hands-on type of person and you prefer to just log everything you spend manually then that might be for you as well a simple Excel spreadsheet will be absolutely fine for just income outgoings and that's it so income and expenditure and then you can work out your profit from there next up I want to talk about how I say for tax this is something that can really get business honors and sometimes is the reason that business is closed down in the first place and I want you to make sure that I avoided this at all cost and I made sure I saved for my tax so I never spent that money sometimes I would dip into it a little bit if I was having a big product launch but typically what I do is any income I receive from the business I put away 30% of that into an account especially for tax I just opened up a savings account an online savings account with my bank because that was Santander at the time I would just funnel 30% into that account every time I received any income into my account that way I knew that I'd saved enough and even if I dipped it in I would still have that kind of nice cushion to fall back on the one thing I would look out for is I have been saving 10% this year and my business has kind of took off a little bit and there's something called payment on accounts which no one warned me about apart from Lindsay from nutmeg and aloe when I was filing my tax return this year basically a payment on account is a prepayment for the following tax year and it normally happens when you are making decent profits or the taxman tinks tax from you prematurely that's basically what payment on account is but if you're just starting off and your profits not going to be super super high then I wouldn't worry about that too much yet if you're at that stage I would definitely recommend getting an accountant which is what I had to do this year I have just got myself in the Kullen but the first time I filed my tax return I just sat down with my dad and my dad to help me and we looked through QuickBooks and QuickBooks actually has a little section that fills in your tax return for you and you just have to go into the hitch MRC website in the UK and you basically can copy the details that QuickBooks has done for you and it breaks it all down and you want to just run over that and make sure everything's okay and yeah I filed my tax return myself for the first yeah our tax rate is April - Errol in the UK so we have till January to pay that tax store I have just paid my tax it is now August for tax year 2018 to 2019 but I actually have till January so although that tax year is over it ended in April and I have told January to pay it but I've paid it now so that it's out the way and it's all good and I can now get saving for the next tax year so you do have a long time to go until you need to file your tax return so I wouldn't worry too much just make sure that you are putting save and society tax because there is nothing worse than a nasty tax bill and try and do it as soon as possible as well this would be my advice and I've done mine as soon as possible so that I know it's out the way I've got it I've got it paid and also if there is any nasty surprises and you haven't got money sent for whatever reason you have until January to save up for it so I always try and file it early and then you have till January to pay it so try and file it as soon as possible so you know exactly how have to pay and how much you have to save up for January now I want to talk about expansion and growth in the business so I've seen a growth thanks to you guys thank you so much in the business and now have multiple streams of income so I have my patreon my youtube and my Etsy store and Tina's will get in very very very messy and I decided and they'll kind of snowballing out of control and I am NOT great at finance in any way I could do the very basics England and outgoings but when all the extremes of income were coming in I was making more profit and then I was employing Emily Mike things got really really complicated and I decided to hire an accountant it was actually one of Dean's friends so he's been helping me out thank you so much by the way and we decided that it would be good to have catnip Studios limited as a separate company to catnip media so catnip media or basically me so I'm still a sole trader but I also own a limited company which is cattitude use limited and that just happened this year and had to file for a limited company and basically that means I'm a director of a company and there's just benefits through opening limited companies definitely Google it is all sorts of things that are beneficial towards it but we decided that the retail side of things the shopping the Etsy shop basically the e-commerce star would is one business on its own all the shipping or the products expenditures or the income from the XE business and e-commerce business all gets run through catnip limited now the more personal things that are more hobbies to me things like my YouTube revenue is class as sole trader which is me because it is not part of my ecommerce retail business which is why I have two separate things going on cause ultimately catnip limited is my day job and then this sort of stuff like filming on YouTube and stuff of you guys is kind of like my hobby so we pet that as a sole trader income and it's kinda just extra bits on the side it is not through the company it's not income that the company has made itself sounds more complicated doesn't it well if you just start in the small business basically the fundamentals are all you need to do is record your angle you income in and your outgoings and then figure out your profit from that and keep an update version maybe spend every Sunday night or every Friday evening sitting down and just put in in that week's income and that waits weeks expenditure and putting it in your folder for your months and things and yeah you should be okay most of times I save money to make new product launches every week I would take a different amount that would just cover the bills from the business at first I had a freelance client in jobs that I used to invoice again that would just go down in my books as income and I would use that to pay my bills and then any money I would have left over how do you spend on myself and give myself a little paycheck oh I would use it to fund a new product which will eventually hopefully fingers crossed if that product was successful bring in more revenue which then I could invest in more product definitely saved money to invest more in your business and yeah I hope this was helpful I've been talking for a very very long time on the camera I don't know how I'm gonna break this down and I don't know if you're gonna find this helpful at all but that is basically how I did my finances especially when I was self-employed basically just kept these bad boy wallets made sure attracts my income and expenditures from QuickBooks and yet then I filed my tax return from HMRC one thing I will say is you will need to register as a sole trader or self-employed if you're in the UK on the HMRC website depending on where you're from you're gonna have to google it because I just don't know any other countries that's what I had to do I registered as a sole trader it was really quick and easy to be honest and then you look at it when you need to file a tax return and tip don't leave you tax return - last minute because that's what I did the first ever time I filed a and I got a charge I hope you found this helpful and informative in somewhere sorry I couldn't be more in debt come again I'm not a financial advisor but that is just how ass that it when I started out in business and how I kept track of my finances and yeah I hope you found it helpful if you guys have any tips for finances and so for other people watching this video definitely reach out and leave it in the comments below everyone to see and yeah do you research go check out school share if you wanna know more in depth things about financing and stuff like that from actual people who know what they're actually talking about rather than this mashmallow over here okay thanks so much for watching and thank you again to my beautiful patrons who allowed me to sit down with you guys and we call these types of videos so thank you you guys so so much also we now have a discard so we can chat every day on discard it's so called soft on and it's open to $2 patreon so if you want to come check out our discard and have a chat and just yeah just basically chat well Lovejoy keep progressing so anyway I'm gonna go now thank you so much everyone I love you so so much I hope you found this video helpful all right [Music]

Channel: Katnipp

Views: 70,365

Keywords: etsy, etsy shop, etsy finance, etsy tips, personal finance, etsy finances, selling on etsy, etsy seller, etsy business, etsy fees explained, etsy seo, etsy success, finance, etsy (website), etsy advice, sell on etsy, etsy changes, finances, etsy fees, etsy money, etsy sales, etsy taxes, new etsy fees, how to sell on etsy, etsy payments, how to start an etsy shop, etsy shop tips, etsy income, make money on etsy, katnipp

Id: UprfsM_8IgA

Length: 21min 10sec (1270 seconds)

Published: Fri Aug 30 2019