Why your craft business needs bookkeeping tools

If you run your own craft business, you need to spend a lot of time buying supplies and turning them into something unique. It can be difficult to stay on top of your accounting if you don’t have bookkeeping tools to help speed things along. 

Figuring out how much your current inventory is worth, how much you sell, and how much money you make can be hugely time-consuming. Bookkeeping software can make some of these processes much easier and faster for you. 

In this guide, we’re going to explore how craft business bookkeeping software can:

• Be time-saving
• Reduce the chances of mistakes
• Aid inventory management
• Send invoices on the go
• Simplify your taxes
• Help with pricing

Keeping your finances in order is incredibly simple with accounting software tied directly to your business bank account. For example, if you sell your crafts exclusively on Etsy, then the software can note and keep the records of each sale. 

The values can get instantly recorded and filed into HMRC compliant categories with bookkeeping software. That means less time you will have to spend sorting through your files and more you can spend crafting. 

When calculating your books, it can be challenging to keep track of loads of different numbers. For instance, you have to manage your income and costs, using them to work out your gross and net profit for a certain period. If you have to process a large number of transactions, this can quickly become overwhelming.

If you manage your books yourself, take extra care to do everything correctly. Misreading a single number could ruin your profitability calculations. The last thing you want is to waste a couple of hours trying to find one incorrect entry. Automated software doesn’t have that issue.

With bookkeeping software, like the Countingup app, you could use the automatic categorisation feature, which sorts all of your expenses into HMRC-approved categories.

You can also use bookkeeping software to manage your current inventory. When you know how many sent, pending and unsold products you have, you can use your finances more effectively. 

If most of your inventory is unsold, for example, you know that you don’t need to order more supplies yet. On the other hand, if a large portion of your inventory is sold or pending, it can be a good idea to start refilling your stock.

During the holiday season, you may experience increased demand. Using your software’s records of previous years, you can attempt to anticipate, prepare, and fulfil these orders ahead of time. Analysing your past sales to plan ahead can help make sure you fill as many orders as possible. 

If your craft business takes orders directly, you’ll need to write and send invoices to each client. Since writing each invoice can be time-consuming, using accounting software can help you speed up the process. For example, the Countingup app lets you generate unlimited invoices, even including your company logo. 

Once payment comes through, you’ll get a notification and the app even assigns it to a specific invoice. Assigning invoices can make it more simple to track who has paid you, and who you may need to remind. 

The government’s new tax project is Making Tax Digital (MTD). Designed to update and simplify your taxes, MTD works best if a copy of your records exists online. Tax administration can be more efficient and effective by using MTD-compatible accounting software (like the Countingup app). 

Using MTD-compatible accounting software means you won’t have to find and re-enter any information processed by the software. If you struggle to understand the old system, transitioning to MTD should make filing your taxes easier — especially if you use bookkeeping software.

If your knitting business is new, initial prices may be based on the cost of your supplies and how long it takes to knit something. As your business grows, and you gain more experience, you may be able to buy supplies in bulk and knit the same things faster. 

Bulk buying and faster production can reduce the cost of creating your product. If you want to restructure your prices with these new, lower costs in mind, doing it manually can be confusing to work out. Instead, using bookkeeping software can help give you an accurate idea of what your products cost to make.

Having an accurate idea of what production costs are is essential to improving your profit margins. 

Managing your own craft business, making products, and dealing with customers can be stressful enough — without worrying about your financial management too. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. 

Find out more here and start your three-month free trial today.