8 Bookkeeping Tips for Your Online Course BusinessDec 01, 2020
Want to run a profitable online course? Managing your money properly is key. In this guide, we'll share 8 bookkeeping tips for your online course business.
You might have plenty of expertise in the topic you teach, but...
Accounting and bookkeeping isn't exactly your "thing".
Am I right?
These aspects of managing your income may be outside your comfort zone, but they are absolutely vital to the profitability of your online course.
Proper bookkeeping ensures that you're building your revenues and achieving your financial goals.
But as you know, accounting can be complicated. Add a digital, rapidly-evolving environment, and balancing your books can be a source of stress and frustration.
Luckily, there are ways for you (yes, you!) to better navigate your finances and effectively manage your online course income.
In this guide, we've laid out 8 tips for doing the accounting and bookkeeping in your eLearning business...
The Importance of Good Bookkeeping
Before we get into the details of how to better balance your books, it is important to establish the importance of good bookkeeping.
Bookkeeping involves managing all financial transaction information, such as accounts receivable and accounts payable, credits, and debits. Bookkeeping is essential because it helps you:
- Manage your tax filings
- Make business decisions
- Finance your online courses
Any digital entrepreneur will require the insights and awareness available through good bookkeeping. This requires the effective use of digital tools and record-keeping strategies. By finding and using the right tools, earning passive income through the creation and dissemination of online courses is possible. Good bookkeeping is vital in keeping your passive income passive.
Start by separating your business finances from personal finances, then build a bookkeeping strategy that works for you, one you can consistently review for best practices.
OK, now that you understand the importance of good bookkeeping, let's dive in to the nitty gritty!
1. Separate Your Finances
When it comes to effectively generating passive income through online courses, it is essential to separate that income from your other day-to-day expenses and profits. Your first step should always be to distance these two portions of your life so that you can better keep track of your expenses and revenues while also creating a better understanding of your overall financial situation.
Open checking and savings accounts that are specifically built for handling your digital course finances. This allows you to specifically finance your accounts the way that you want while ensuring that your understanding of your acquired revenues matches reality. Should you blend your personal and business accounts, understanding where your income and budget do not align can be more difficult than you might think.
Practice good bookkeeping by tracking separate accounts for your digital courses.
2. Budget and Inventory
Setting yourself on the path for financial success requires budgeting from the get-go to fully understand what your expenses to revenue ratio might look like. Creating an inventory of all necessary expenses in the formation of your online courses is a key part of this process. From recording equipment to software needed to produce valuable courses, you will have business expenses that you need to account for. As the saying goes, it takes money to make money.
Understanding how much it costs to create an online course comes down to a variety of factors. These include:
- Hosting platform
For nearly all of these variables, free options exist that can get you on your way to success. Much of your budgeting and inventorying will rely on equipment you may have already acquired for your personal or business operations. Then, it is a matter of using your skill sets paired with available software to create the best course possible.
For example, you can use free screen recording software or subscription-based services such as FilmoraScrn that offer you greater potential. Then, host and market your course simultaneously using services like Kajabi or Teachable. Cost varies with each platform. However, you can get away with keeping your expenses for each course you create under $200. Then, growing your income will be a matter of tracking those expenses against your accrued revenues.
3. Account for Digital Assets
In the modern digital landscape, a host of digital currencies and assets can be used to purchase digital courses and complete transactions. This can range anywhere from PayPal to cryptocurrencies. Accounting for the digital assets you accrue and that are used to purchase your products is a key aspect of managing your online course revenues.
Since digital assets can function differently in terms of tax obligations and reporting, you need to stay abreast of modern developments. This means keeping track of regulations in terms of digital payments made internationally as well as cryptocurrency uses.
If you plan on diversifying your customer base and their payment options, It is helpful to divide accounts by various payment types. Then, create an automated system for tracking all revenues across different currencies.
In bookkeeping for your digital business, automation can be your best friend. Since accounting can get complicated and diverse payment options and platforms only increase that complexity, your best bet is to find a software that can help you accumulate all your separate data in one easy to understand place.
Luckily for you, plenty of software options exist. While some of these are free, other paid services can better help you condense your financial information. Software like QuickBooks Online, for example, offers scalability, integration with third-party apps, and cloud-based data service. This can be especially vital in securely managing your financial data. QuickBooks can cost anywhere from $25 to $150 per month, depending on the features you desire.
Meanwhile, platforms like Wave can give you limited management of accounts and even payroll for free from a mobile device.
The level of automation you desire will play a role in the software you choose. Since some of your paid options will allow you to integrate third-party applications, you will be able to pull data from various sources two more easily and conveniently keep your books.
5. Identify Tax Incentives
When it comes to enhancing your revenues to the fullest, it helps to be aware of all potential tax incentives. Digital entrepreneurs—many of whom are full-time parents—can make use of their life situations to create the best possible financial future. Tax incentives and resources can include everything from child credits to small business incentives.
Here are some of the tax resources that you should be aware of:
From cutting down on your home expenses through the Home Office Deduction to deducting costs of childcare, these items and more can help you balance the books. Save money while operating your digital business from home and let your online courses act as a source of revenue. The potential tax savings you might then qualify for will help set you on the path to greater success.
6. Consider Outsourcing
Managing your cash flow and accounts can be a huge task for work-from-home entrepreneurs. Keeping track of all this information can sometimes be an excessively difficult job, especially if you're trying to manage children at the same time.
That's why it may be worthwhile to consider the tough decision of outsourcing your bookkeeping. While costs are associated with hiring a financial advisor or manager to keep track of your income, it takes the effort off you. At the same time, the expertise of a third-party can help you be aware of all cost-saving practices and tax deductions.
Not every digital instructor will want to hand over their books to a third party. However, in personalizing your financial situation, you can add clarity to the overall process. Third-party bookkeepers can also be invaluable as a second pair of eyes, potentially catching errors you might miss while keeping your cash flowing smoothly.
7. Monitor Your Time
Understanding the true value of your endeavors requires that you keep track of all your time and expenses. While you may have already dedicated separate bank accounts and software platforms towards managing accounts payable and accounts receivable, you may not have considered implementing a process of tracking the time you spend creating and managing your digital courses.
Time to revenue is an important ratio to consider when understanding your passive income. If you find yourself spending excessive amounts of time for little payoff, then your digital business model needs an overhaul. Luckily for you, there are plenty of easy to use time management tools that can help you make the most of your schedule.
Some popular time monitoring platforms include:
This is but a small sampling of options available to any entrepreneur looking to analyze expenditures and the value of their time. Some of these options are free, while others have paid components. Explore these and more to find the best software for tracking your time input versus money made.
8. Check-up and Review
Your bookkeeping process is only as good as how effective it is in terms of your time and budgeting. All these aspects of your accounting strategy must be balanced, and that means an efficient process for storing and tracking records. This can be done using software, everything from the programs listed here to the effective use of Microsoft Excel or Google Spreadsheets.
To ensure that you maintain accurate records and avoid any auditing pitfalls, there are a few things you should absolutely do. These include:
- Divide your credits and debits into separate tracks.
- Maintain records for up to four years.
- Keep track of important tax dates.
- Conduct quarterly reviews.
This last item may be the most vital. Without a clear picture of your revenue data per quarter, it would be difficult to understand where and how you can improve your course offerings and marketing strategy to better grow your passive income.
With consistent reviews of your comprehensive bookkeeping data, digital entrepreneurs of all situations can enhance their strategies.
Bookkeeping for your online courses doesn’t need to be difficult.
With the help of useful software for tracking your account information, you can better manage your finances regarding your digital learning business. This track can be especially lucrative for at-home professionals looking to generate passive income, but first, you must maintain your records.
By following these tips, you can build a fully functioning process that all but takes care of itself, leaving you with the valuable time needed to create and sell your online courses.
Beau Peters is a creative professional with a lifetime of experience in service and care. As a manager, he's learned a slew of tricks of the trade that he enjoys sharing with others who have the same passion and dedication that he brings to his work.