Accounting Tips for Side Hustles: How to Manage Invoicing and Billing Like a Pro

Welcome to Building Better Developers, the Developer Noir podcast, where we work on getting better step by step, professionally and personally. Let's get started. Well, hello and welcome back. We are continuing the developer journey. We are Building Better Developers. It is Developer Noir. We are cranking through this season almost there. I happen to be Rob Brodhead, one of the founders of Building Better Developers, also a founder of RB Consulting, where we do software consulting, business consulting, ways to simplify, automate and integrate your systems so that your technology sprawl and all of the related pain can be removed and reduced as you get a nice, you know, instead of being in that stinky smelly car going down the road that's about to fall apart, we're going to put that stuff back together and get you in that like, you know, F1 formula racer kind of thing. Good thing, bad, bad thing. Let's see. Bad thing. I think I, well, I'm trying to think out if I've talked about this last time. Oh, so I'll start with the good one and then I'll just flip into it. Good thing. And you guys can look into this. There's a whole bunch of stuff. My son's given me some information. There's a bunch of stuff going around. Adobe and their Creative Cloud and some of their subscriptions and stuff like that. Well, one of the things that I got the other day was something that said, hey, we can, you can flip your subscription, which I happen to have been a subscriber for a long time for a bunch of different stuff. Like, hey, you can flip your subscription to this other thing that's 50% less. And it's actually, it's not quite the same stuff that was the other one had, but it's a, it's actually a better fit to me. I was actually just digging. I was just looking, you know, the other day I was starting to look through that a little bit and say, ah, there's less stuff I don't use. So good thing is I get what I need, such all the same stuff I need for half the price each month. Bad thing along the same lines is I've been doing some financial straightening stuff out and things like that. And there's like, it's one of those, it's like automation is really nice for financial stuff, which is like pay your bills online, do this, do that. Just don't even think about it. It is also a real pain when you let it just go for too long. And now you got to like roll it all back and clean it all up and figure out how you had, I literally am financially technology sprawl. I have too many places, too many things going on. All these little deals I took advantage of and all this little crap that is now it's like, it wasn't probably worth the deal. So it's like, no, simplify it all right back, integrate stuff. I'm going to get like, you know, a nice little pipeline of money coming in, money going out. So I don't have to look up a thousand different places. So there's some good and some bad right there. And it may actually have something to do with our topic today. But I'm going to hold on because I want you guys to hold your breath and let Michael introduce himself. Go for it. Hey everyone. My name is Michael Molloch. I'm one of the co-founders of developer NURB building better developers. I'm also the founder of Envision QA where we help small to mid-sized businesses analyze their software stack, look at what their business needs are and build the right software tool for their needs. Good and bad this week. I'll start with the bad. Went out, bought some TV antennas because my wife loves NASCAR and Infinity Series has decided to move everything over to CW, which is only available over the air or on Hulu Live. Could not get that to work. So spent $300 for antennas, had to take it all back and then had to go subscribe for Hulu Live. Tried YouTube TV and found out we're in the zone that is blacked out for YouTube TV. The only source was Hulu Live. So my TV bill just doubled again. Kind of love this. The good is I've been using this free financial tool called Wave apps for many, many years to do my financial bookkeeping for my company books. Recently they changed their tiers and things got a little funky. Today I figured out how to get everything the way I wanted it like I used to. So now I'm able to continue to use the tool. Did not have to go buy quick books. Thank God. And I'm back to reconciling my books, which kind of leads into our topic today. Wow. We both had these, you know, you know, a little bit of a spoiler alert or whatever, but now we don't have to worry about spoiling it because now it is fresh. We're serving this right on front in front of everybody on the table. We're going to talk about the accounting side of your side hustle of your business. Really going to get, we've talked about pricing, which is really not the accounting side. We're going to talk about invoicing and billing and some of those kinds of things. Now Michael let us, he'll give me like a nice little starter thing was he mentioned the the keyword quick books, whether you use quick books or first books or all the other tools out there. The first thing is I highly, highly, highly recommend that you pick a tool that you use for your side hustle, for keeping track of all of your transactions separate from just like we mentioned before, you should have, when you're starting a business, have a separate account. There should be a straight business account period. That's like, it's not your extra checking account or your other savings account or a credit card that you're just like, I'm just going to call that my business expenses. Now it may be, you put all your business expenses on that, but there should be somewhere a checking account, literally a checking account that is tied to your business that you drive everything through that. That is going to be key. Now as part of that, you should have a, some sort of accounting software that you can use that is tied to that or that tracks that. So you can, I don't know, keep track of your bottom line, but also what you're going to need depending on where you're at, at the very least, you're going to need to be able to do some sort of sort of billing and invoicing, some sort of reports related to that reports related to your income and expense, your, your, your final year stuff, filing taxes, potentially quarterly taxes if you need to do that, and maybe even payroll. So find a tool that is comfortable for you. Like Michael said, he's like, he has been in wave accounting forever and to change that would be a pain, not only for him as a user, but also because then he's going to move all the data and make sure that it moves right and all of that kind of crap. Nobody, trust me, you don't want to have to jump to a whole different system really ever in any situation. This is like across the board, basically something you don't want to do. It's not pretty. So when you look at a tool, take a look at where it can grow because that's something you don't want to jump into. And a lot of people do this. They jump into some like, you know, free little app that does something super simple for them and it's cheap or like it's cheap or free. I like, okay, cool. This will cover me right now. And then six months or a year from now, it doesn't cover them anymore because now suddenly instead of something that only, you know, that is great for having five customers doesn't work when you have 500 customers or it doesn't expand to having to track expenses from different places or the number of vendors that you have or, or the it gets into like, I don't want you guys to fall asleep talking about accounting stuff, but like classifications and things like that, that you have to worry about including one of the big things you're going to find across the board is does it have any integration with electronic integration with like your bank accounts or other places like that, including electronic filing of taxes, which is required in some cases and in some certain places. So the other pieces, the ability to calculate or file taxes for you. And this is not just your year in taxes. It could be at other levels. And then payroll is another big thing. Actually the fourth big thing that is probably more important than all of those that a lot of these tools have some, they will work with you on it is the ability to actually take payments. Now you may have a square account or something like that where you can run everything through it, but there are accounting software options out there where they also have either directly or as part of an add on the ability to take payments, whether it's through like credit cards or some, I think even have the ability to set up a C H and some things like that. So that's something you need to think about. I want to, before I pass it over the mic, I also want to talk about the billing and invoicing side of it. We've talked about rates. This is about frequency and professionalism. Now you can charge whatever it is. Let's just say you're, you know, you're a nice little developer and you charge 50 bucks an hour and we're going to, we'll take two different things. Let's say you you're charging 50 bucks an hour and at the end of a week you did 20 hours of work and you want to go bill them for the thousand dollars or 20 times 50 is the thousand just quick math for you people. Or let's say that you had a thousand dollar project that you build them for you. Like, Hey, I, I, we agreed it's going to be a thousand dollar project. Boom. I'm going to go ahead and bill you for it. Now we have mentioned Upwork and Guru and some of these other sites. They a lot of times will help you with that piece of it. They do include it in their offerings and things like that. Sometimes a level of invoicing and billing and things of that nature. So this may, you may be able to take that off the table, but let's assume for this, this exercise that you haven't, that you actually do need to send an invoice. And I have had people work for me at times where it has been like pulling teeth to get them to send me an invoice so I can say, yes, this is the work that came in and I can tie it to a check because I actually have proper accounting principles of some sort as much as I can be not an accountant. So what you will need to do and sometimes you'll do things like POS and things like that. So talk to your customer. You should always have something and you may be asked by the customer, how do you handle billing? So with that question, it's going to be how frequently do you send one? Do you send them an invoice every month? Do you send them every week, every two weeks, bi-weekly, 15th and end of the month, whatever. A lot of times that is, it's up to you. It's how you bill. Now realize that if you wanted to bill every week, they may or may not pay those off every week. They may just like, you know, a month later, pay off three of them at once and you get a check and you have to go back and track all of those. So the granularity of your billing is how you do stuff and they just need to know that, hey, I'm going to send you an invoice every so these on the schedule and then follow up. It's just like when we talked about podcasts and blogs and things like that. Like you need to be scheduled. Now you don't have to send it at 5 a.m. every Tuesday or something like that. But what you do need to do is do it like if you say it's every other week and I send it the end of the week, every other week, you need to make sure that you send it the end of the week, every other week. They need to understand when to expect it. And then as part of that, there is also like, what are the terms, which are basically how soon do you expect that to be paid, which is critical. Because if you don't mention anything, you don't know it's up to that customer. And it could be some places will wait 90 days or more to pay a bill. That may be a problem for you, particularly if this is more than a side hustle and you need to like put food on your table. Now it can go as low as like some places like immediately or maybe seven days later or within two weeks or something like that. Make sure you are clear on all of those kinds of things. These things I'm talking about, like how often are you going to bill them? What is the expectation for payments? And make sure that you are clear on that before you go into especially a longer term kind of project. It's a one and done. It's probably not going to be as big a deal, but it could be. And definitely if it's going to be something where you're going to get into a three or six or 12 month agreement, make sure that you are very clear on that. I will pause there and pass it over to Mike and see what are your thoughts on this and maybe questions and some hints that you may have for people. Yeah, so I know I initially in our introductions started talking about the QuickBooks and Waves. There are other ways you can keep track of your books. Even if you're just starting out, you need to record everything. So when I went through the whole rebranding process and relaunching process, I actually was having to keep two separate books because I still have the old company that was being phased out and had to reset and create a new ledger for the new company. Except since the new company didn't exist yet, it really didn't make sense to go out and spend a lot of money on expensive software to set up a new ledger. Ironically, typically all a ledger is is a spreadsheet. So you can go get open office, Libre, if you have Excel, use Excel. Just keep track of what you're spending, what's coming in, what's going out initially. And then as you need to evolve the business, you move into other applications like wave apps or free books, QuickBooks, whatever. As you're going through this process, like Rob mentioned, you know, we also want to invoice our customers. We want to send out those nice, pretty invoices. Well, what he didn't mention is, yes, you can go get those other tools, but here again, you can use free tools for the process. Tools like Pages, Word, OpenOffice. A lot of these have good free templates for invoicing. Just go, hey, find the template. I want invoices and then go pick one that works for you and just drop it in there. Add a logo. You're done. Minutes worth of time does not take that long. It may seem daunting at first, but once you get it done right, it's pretty much copy paste move on, but make sure you record those payments into your ledger. You don't want to not get paid. On top of that, though, as you're going through this process of working the business, you need to keep track of those bank accounts. You want to make sure you reconcile your income and your expenses with your ledger. Cause sometimes you may have those odd payments like I did initially where everything was on a personal credit card because the business account didn't exist yet. I was still going through the process of getting the LLC, the S corp. So I didn't really have the tax ID and all that to go just go set up a business account. Well, also, and lesson learned as I got hacked again, a month ago on my business account for some strange reason, cause I don't use the card for anything. Use, you want a credit card or a business card to charge those external expenses too. Because if something does happen, you don't want to tie up your physical money while you're trying to reconcile any grievances or mischarges. So you do still need to keep track of where are you spending money outside of your business checking? Because if you don't and you don't see it on your ledger, you're going to forget to put it in there and not pay yourself. So you're going to go pay for something and not get deducted. Ran into that in recently because I had those weird charges. I had to go literally like Rob mentioned with his subscriptions. I had to go through a whole bunch of different websites to say, okay, did I buy this, did I buy this? I had it all written down, but it's like, where did these weird charges come from? Ultimately they weren't mine. Um, so it's one of those things. It's tedious, but if you stay on top of this, it's going to be easier. Now, the bad thing I did is in, you know, a lot of business owners do this. We are reluctant to work in the business a lot. It's because really working on the business, you know, that's where we get paid, that's where we make the money working in the business. We're not really getting paid. We're not, we're doing things that we don't feel is as productive because we're not getting paid for it, but it does make a difference because if you aren't keeping an eye on those accounts, something weird, like a miscellaneous charge could come in and then you don't catch it while someone could essentially come in, drain your account and then you're like, Whoa, what happened? Um, so kind of following up on your accounts at least once a week. Don't necessarily have to do it daily, but I find at least once a week, take a snapshot of your ledger, your bank account, compare the two, do some reconciliation if you're there, if you're a very active business or a very active side hustle, yes, this may take a little bit of time, but if you buy the right tools like QuickBooks or some of these other tools, they'll help you auto reconcile with your bank accounts, like Rob mentioned. So these are just some of the things you can do for working in the business to make life a little bit easier. Now, I'm not a huge fan, which I said of always working in the business, but we do need to, so kind of check yourself and make sure that at least once a week, maybe do a reminder and say, Hey, have I reconciled my books? Have I sent those invoices? Have I followed up to make sure I got paid? Because the other thing you have to do is you need to make sure that those invoices you sent out that your customers are paying you. You don't want to work for free. You don't want to be five, six invoices in on a customer and find out they're not paying you well, why are you still doing the work for them? So again, this is just some of the things to do to help you kind of keep your books in order and keep your business running smoothly. Yeah. I think there's some good examples there. One is use template. It is very helpful to use templates. Wherever possible. You don't have to reinvent the wheel. There have been a billion bills and invoices done over the years. So just find find something that looks good for you and you don't need to get it super fancy, but you can put some together. Like Michael said, you can find a really good template, put a logo on there. You're off and running. You don't have to worry about it. Retracking invoices and payments is very critical. I still, and I will have customers that I've had for a long time will regularly have stuff where I will send stuff out. For example, let's say I'm sending things out every two weeks, but they, I know from how they do stuff, they roughly pay once a month. There are times that I will look and I'll say, okay, this is what I'm expecting. And they'll pay an invoice or two and there's an older invoice that didn't get hit. And I'm like, well, wait a minute. That to me, it's like a red flag that you didn't pay this older invoice. So did it get lost? And usually I'm, I'm usually very helpful and say, by the way, here is that older invoice, just to be sure. And there are a lot of things where it's like, like I've got one right now that I hate to call somebody out, but literally got a, hey, I'm putting the check in the mail today, like a week ago, and I haven't seen the check yet. And so I'm going to look and see what comes in the mail tomorrow. And if not, if I don't see it, I'm going to be like, Hey, you said the check is in the mail, did that actually get into the mail? Because also now this is like one of the same, and this is actually, I think sometimes a problem for your customers too, is if you do this and like, Oh, I didn't catch it. And now they're like, for this case, now they've got two invoices and they're like, you know, there, there's more that they need to put out right now to pay out than maybe they were expecting. Cause maybe they weren't paying attention to what they needed to do as well. Obviously they weren't because normally they should expect that, Oh, I'm going to pay a thousand dollars out to this vendor, let's say. And if you don't pay a thousand dollars, you're not going to get a regular, let's say. And if you don't that month, usually they're going to say, Hey, did you forget to invoice me? Which I have seen that a couple of times before as well. And you don't want to say, Oh yeah, I forgot to invoice you because you just don't sound as professional. You are better off. I have found going through this stuff being follow up on it and just do the regular follow ups based up follow ups based on your agreements and things like that, you don't have to hound them. You don't have to like send them off to collections or send cousin Vito over there to like, you know, smash their, their kneecaps, but you do want to stay on top of it. And there is a point like Michael said, and I have literally early on got into the situation where they kept saying, yep, we'll get it. We'll get it. We'll get it. We'll get it. We'll get it. And I suddenly had three months of work that was not paid. And I was like, I have to stop. I was like, I love working for you guys. I love the rate and everything else. I was like, but I can't afford to wait, continue to wait for you guys to actually pay me. And when they did, it was all kinds of issues because I got all this money at once from, you know, three months and then had to deal with everything. So be sure that you're keeping on it, that you're, you know, you're pushing with them and I was, and so it's also have in the back of your mind, like in some of those cases, some sort of a threshold, it's like, if I get to this point and they're still not giving me the answers I need, i.e. a check or a payment into my account, then you need to say, Hey, we have gone beyond what I'm comfortable with. And early on with a new customer, particularly, I'll just say I'm sorry, but trust, but verify. I just, I haven't worked with you. Nothing personal. This is just business is how we do it. And follow that stuff up because yes, as you get further in and you know, a customer, then it's a little easier and you just sort of things start to flow. But early on you want to make sure that all of those things that you communicated are followed through on. That being said, one of the things that we have communicated over and over and over and over again is to send us an email at info at development order.com. Please give us some feedback because especially now as we're wrapping up one season and we're going to go into the next season, the next season is going to be regular nuggets of information and action items and challenges and things like that to really build better developers to talk about how do we build better developers, including ourselves. So there's a lot of these, if not all of them, that we will be part of these challenges that we are going to put out. And these, you know, these lessons learned in these ways that we can be better. So we would love to have from you. Options to that is like, what are some of your opinions? What are some suggestions that you have particularly? What are the, some of the things that you do on a regular basis to keep yourself current or make yourself better? Cause we all have them, particularly as we get further into our careers. Once you get through those first few years where you're just drinking from a fire hose all the time, there is that point where you're like, okay, I'm ready now to like control my own destiny a little bit, and now you have to push yourself, you have to go find the ways that you're going to grow to get to where you want to be. That being said, hang out with us and continue to grow with us to listen to this podcast, to give us feedback wherever you can. And we would love to hear from you as we're wrapping this one up. But for now, go out there and have yourself a great day, a great week, and we will talk to you next time. Thank you for listening to building better developers, the developer podcast. You can subscribe on Apple podcasts, Stitcher, Amazon, anywhere that you can find podcasts, we are there. And remember, just a little bit of effort every day ends up adding into great momentum and great success.