Disclaimer: The content in this post is for informational purposes only and its based on the author’s personal experience. For legal/financial advice please hire a professional.
As a home baker, keeping track of your expenses should be at the top of your priority list. Understanding your costs is crucial for running a profitable business. In this post I’ll share with you 4 main reasons why keeping track of your expenses is important.
1. Helps You Set Prices
Knowing your expenses is essential to setting the right prices for your baked goods. If you don’t know how much it costs you to make each item, you won’t be able to price them competitively or make a profit.
2. Identifies Where to Cut Costs
Tracking your expenses can help you identify areas where you can cut costs. For example, you may find that you’re spending too much on ingredients or packaging. By identifying these areas, you can find ways to reduce your costs and increase your profits.
3. Provides Financial Clarity
Keeping track of your expenses gives you a clear picture of your financial situation. You’ll know exactly how much money you’re making and where it’s going. This clarity is essential for making informed business decisions and planning for the future.
4. Helps with Tax Preparation
When tax season rolls around, you’ll be glad you kept track of your expenses. You’ll be able to deduct business expenses on your taxes, which can save you a lot of money. However, to take advantage of these deductions, you need to have accurate records of your expenses.
Recently I finally decided to invest in QuickBooks https://quickbooks.intuit.com
It has made keeping track of my expenses so easy and I wish I had signed up sooner!
To conclude
Keeping track of your expenses is crucial for running a successful home bakery. It helps you set prices, identify where to cut costs, provides financial clarity, and helps with tax preparation. By tracking your expenses, you’ll be able to make informed business decisions and increase your profits.
Big Shout Out to My Tax Guy
Efrain Anaya, EA Mobile Taxes
Efrain is a professional IRS enrolled Agent. He helps small businesses throughout the DFW area with their taxes/financial questions. If you don’t have a reliable tax expert I’d highly suggest reaching out to Efrain!
Find his instagram here
