TIME TO CHECK YOUR FOUNDATION

When you started into craft making, you were probably more focused on the creative process than on building a business. If so, it’s possible your business foundation, your financial recordkeeping system, is not as solid as it could be. Now could be a good time to overhaul it and make sure you’re using your system effectively and efficiently. We’ll look at two popular systems here and I’ll offer some suggestions for the best use of them.

The Inexpensive Alternative

The Dome Simplified Monthly Bookkeeping Record or Dome System, available in any office supply store, is described by its publishers as "the simplest one page monthly cumulative record ever published." And it is! It is most appropriate for a new business with categories of expenses that neatly fit into the pre-printed names on each monthly summary sheet. I recommend you carefully read the instructions to assure you use it with maximum efficiency.

With the Dome, you continue recording all the deposits and checks for your business in your (hopefully) separate business checking account register. At least monthly, you then will "do the bookkeeping" by copying each deposit and each check into the Dome, assigning expense category numbers to each check. This is where errors are made, so concentrate on doing it carefully. There’s no way to prove you have recorded all the entries and the amounts have been transferred correctly.

At month’s end, add up all the checks in each numbered category and put the total in the first column of expenditures (Total This Month). For instance, all the 3’s will be the total spent on advertising in one month. To be sure you haven’t missed any, compare the total of the detailed expenditures listings with the monthly total in the summary. They should be the same.

The most beautiful feature of the Dome is the cumulative record that results when you then enter the previous cumulative totals for each category and add these to the current month’s results. By doing this each month, you can always see how you are doing so far and at the end of December your tax return preparation work is done! The Dome is a very cost effective system but is a solid foundation for your business only when it is done accurately and completely.

A More Efficient System

Copying the details of every check from your check register into a bookkeeping system can be a lot of work and holds great potential for error. One-write systems address this by integrating your check-writing into the recordkeeping system. When you write out your check, all the details carbon directly through to the spreadsheet under the checks. The usual check register columns for recording deposits and check amounts are columns on the spreadsheet and there are about 25 other columns available for you to label with titles that specifically fit your business. I like the flexibility to customize the system to your unique situation.

After you write a check, all that’s needed is to write the amount of the check once more in the appropriate column. For instance, the $32.00 check amount for stamps will be written once again under "Postage & Supplies". To complete your monthly bookkeeping, you will add up (or down!) each column on the spreadsheet to get the month’s totals.

I particularly like the one-write systems’ ease and accuracy. Since there’s no copying required, we just have no excuse for not doing our bookkeeping! Each page also has a reminder to do the two "proofs" which enable you to be certain no mistakes have been made. The first proof is to compare the total amount of checks written that month with the total of all the totals at the bottom of the category columns. If the numbers agree, you can be confident that all the checks you wrote have been accurately recorded in a column.

The second proof checks the accuracy of your account balance. Starting with the beginning balance this month, add in the total deposits, and subtract the total checks written. The result should agree with the balance on your spreadsheet. If not, you will want to hunt down the error.

You have a choice of how to create your cumulative totals. The printing on the spreadsheets suggests that you just keep adding each page’s totals into the previous balance, starting from the beginning of the year. This works much like the Dome System. However, I recommend stopping at the end of each month, getting the month’s totals, and transferring them to a separate annual summary page. On one fresh page of the spreadsheet, you can accumulate each month’s totals and, in between the months, combine the figures into a cumulative or year-to-date line. Again, by the end of December you will have your complete summary ready for the tax return preparation.

One-write systems come in the standard size (about 9"X12") or a variety of smaller "personal"sizes. You will want the standard size if you write more than 15 checks a month. It won’t fit in your back pocket, but it will travel well in a larger bag. I recommend ordering the checks with a "check copy". This copy can be stapled to the bill you just paid.

There are two national distributors of these systems, Safeguard and McBee. There may be local distributors in your area as well and your bank may have an arrangement to provide them. I recommend working directly with company representatives as they will spend time showing you how to use it, at no additional charge. Look in the Yellow Pages under "Business Forms".

The cost to set up the system will range from $75 to $125 and will include the specially printed checks, the pegboard, a package of spreadsheets, and a box of window envelopes. The cost is something to consider, but remember you are purchasing a complete, efficient system that you may be more likely to keep up with.