How to Do Bookkeeping for Multiple Revenue Streams

The traditional 9-to-5 job is rapidly becoming a thing of the past.

Entrepreneurs and freelancers alike are diversifying their income streams like never before — think side hustles, freelance gigs, passive income ventures, and more!

While this multifaceted approach can lead to greater financial freedom and resilience, it also brings unique challenges to the table — most notably in the world of bookkeeping.

Are you ready to conquer your diverse revenue sources while keeping your finances organized? 

With doola Bookkeeping, you can rest assured that all your transactions will be recorded according to the relevant tax regulations. Our team stays up-to-date on any changes in tax laws, ensuring accuracy in recording and reporting of taxes for each revenue source.

In our latest blog, we’ll arm you with practical strategies that simplify tracking your varied earnings without sacrificing sanity or accuracy.

Join us as we navigate the path to unified records and pave your way toward thriving amidst complexity!

Untangling Bookkeeping for Multiple Revenue Streams

Businesses with multiple sources of income often find it challenging to track their total revenue and taxable income.

If your business has more than one product or service, you need to be sure which ones are most profitable. 

You must track profit and loss for each of your revenue streams to find how much profit you’re making and where you are losing money.

However, with proper categorization and record-keeping of their transactions, businesses can achieve success in their overall financial management.

How can you tell which ones might need a bit more attention? Or which good or service should maybe be dropped from your offerings?

The first step in untangling multiple revenue streams is to define each source of income. 

Consistent record-keeping is essential to maintain accurate records of all transactions related to each source of income, including invoices, receipts, bank statements, and other financial documents. 

This will help create a clear understanding of the various streams of revenue and make it easier to track them individually.

This includes identifying the type of income (e.g., sales revenue, service fees, rental income), its frequency, and any specific terms or conditions associated with it.

Why Bookkeeping is Essential for Multi-Revenue Stream Success

Diversifying your revenue sources can stabilize and secure your finances and open up new opportunities for growth.

However, this means more cash flows to track, more income to account for, added tax obligations, and managing multiple bank accounts. 

Whether it’s through a side hustle, investments or rectal income, having multiple sources of income can make your financial life more stable — proper bookkeeping is crucial for managing diverse incomes.

Accurate Financial Tracking

With multiple income streams, it can be challenging to keep track of all the different transactions and their associated expenses.

Having an organized system of tracking your finances allows you to identify which income sources are profitable and which ones are not performing well. 

Tax Compliance

Failure to comply with taxation laws can result in penalties or even legal trouble down the line.

Proper bookkeeping helps you track all your income and expenses, ensuring that all necessary taxes are paid accurately and on time. 

Better Budgeting and Planning

With clear visibility into your finances, you can better plan for future investments or expansion projects that could enhance the growth of your various income streams.

You’ll also have a better understanding of where you should allocate resources or cut costs if necessary.

Seamless Cash Flow Management

With multiple revenue streams operating independently from one another, cash flow management can become complicated without proper record-keeping.

You need to know how much money is coming and going out to each stream.

Improved Decision-making

Whether deciding to invest in a new income stream or cutting costs in an underperforming one, accurate and up-to-date bookkeeping records are essential for making sound business decisions.

Best Bookkeeping Practices for Diverse Revenue Sources

#1: Organize and Track Income Sources

The first step in organizing and tracking income sources is to have separate bank accounts for each revenue stream. This will help you avoid confusion and you’ll be able to accurately track the cash flow from each source. 

You should also maintain accurate records of all your incoming revenue sources.

Ensure you include information such as the date received, the source of payment, client/customer name (if applicable), payment method, amount received, etc.

Since it’s a recurring process, moving to an automated bookkeeping solution can save time and minimize human error. You could set recurring billing options for regular clients or implement automatic payments from online sales channels directly into designated accounts.

Remember, consistency is vital in bookkeeping, especially when managing multiple incomes.

Set a schedule, whether it’s daily, weekly or monthly, to record all your incoming revenues. This way, you will stay on top of your finances and avoid any missed payments or discrepancies.

doola Tip:

You can leverage doola invoicing features to create and send invoices and get paid with ease. Use it with our bookkeeping solution to automatically update your records whenever an invoice is generated or paid. 

#2: Creating Separate Bank Accounts

When you have different revenue streams coming in, keeping track of the money coming in and going out can be challenging. With various sources of income, calculating taxes can become complex if all your funds are mixed together.

If you’re self-employed or own a small business, it may be tempting to mix personal expenses with those related to your company’s revenues.

This can make it difficult to differentiate between personal and business transactions. 

One effective way to simplify this process is by opening business bank accounts with Mercury for each revenue stream. Why?

• It ensures that all your business-related transactions stay within their designated account, keeping personal finances out of the equation.

• It allows you to distinguish and track your various income sources easily.

• It helps keep your records accurate. Plus, making it easier for you to analyze the financial performance of each revenue stream individually.

doola Tip:

While having separate bank accounts keeps your finances separate, you still need to track multiple accounts manually. doola allows you to connect multiple bank accounts to track transactions automatically for a consolidated view of all your revenue.

#3: Track Expenses for Each Revenue Stream

Different sources of income also mean different areas of expenses, which you need to track to ensure that you stay within your budget limits and are ready for tax season.

The first step is to separate expenses into distinct categories. 

This could include categorizing by product or service, location, or type of customer. By having clearly defined categories, it becomes easier to identify which expenses belong to which revenue stream.

It allows you to input and categorize transactions directly, making it easier to track and reconcile expenses across different streams.

You can allocate expenses to their respective revenue streams and analyze the profitability of each stream individually. 

One mistake that many businesses make when tracking their multi-revenue streams is not accounting for shared expenses.

For example, if your business operates an online shop out of a physical store, both businesses have separate necessary expenses.

Therefore, it’s essential not to overlook shared costs when determining the expense allocation. Expenses related to shipping fees and product packaging should be included in the e-commerce, while rent and marketing costs would fall under retail business.

doola Tip:

Ensure all expenses are accounted for by automatically recording every transaction using doola’s Monthly Bookkeeping.

This makes it easier to identify which expenses belong to which revenue stream so they can be deducted from the corresponding revenue.

#4: Pay Close Attention to Taxes

When it comes to managing multiple sources of income, taxes can be tricky to navigate.

Since different sources of income may have different tax implications, it’s essential to understand the specific rules and regulations that apply to each stream.

For example, if you have a regular nine-to-five job, your employer will likely deduct taxes from your paycheck, and you may also be eligible for deductions such as health insurance or retirement contributions. 

On the other hand, if you earn income through freelancing or consulting gigs, you will receive a year-end 1099-MISC income statement designating self-employment income.

So, you’ll want to account for any business-related expenses since these can lower how much you owe in taxes. 

Step 1: Setting up a Business Entity

Incorporating your business can be a great way to maximize your tax savings. For example, if you set up a limited liability company (LLC) for your side gig, you can enjoy the benefits of pass-through taxation. 

Step 2: Check for Deductions

You can deduct any ordinary and necessary business expenses to lower your taxable income.

While expenses may vary by industry, some common examples include costs of goods sold, salaries and wages, advertising expenses, rent, utilities, and the home office deduction.

You can also utilize tax credits for business owners, which are a dollar-for-dollar reduction in the amount of tax you owe.

Some common examples include the Research & Development Credit, the Work Opportunity Tax Credit, and the new Clean Vehicle Tax Credit.

Step 3: Keep A Detailed Record

To claim these deductions and credits, keep a meticulous record of all income and expenses throughout the year.

Tracking your expenses can help you simplify the tax preparation process and maximize tax savings when you file your return.

doola Tip:

It is also essential to stay informed about the tax deductions, credits and laws that may affect your specific situation.

Get expert advice from a qualified accountant or tax specialist from doola for valuable insights into maximizing deductions and minimizing taxes owed while ensuring full compliance with applicable laws.

#5: Set a Unified Bookkeeping System

Financial record-keeping can be overwhelming and time-consuming with a diverse range of revenue streams.

This may seem obvious, but sometimes, entrepreneurs with diverse incomes overlook certain revenue streams or forget to include them in their books. 

However, a bookkeeping system can automate the process of tracking and organizing multiple sources of income, saving both time and effort. This means comparing your recorded income and expenses to bank statements and other financial documents to identify any discrepancies. 

With doola’s All-In-One-Accounting, you can create separate categories for each type of transaction and easily track incoming and outgoing funds related to each revenue stream.

For example, if you have a rental property, you may receive monthly rent payments and incur expenses such as maintenance costs or mortgage payments. 

✅Connects Multiple Bank Accounts

It also allows you to connect your bank accounts or credit cards directly to the program so that all transactions are automatically recorded in real-time.

This way, you can ensure that all income sources are accounted for at all times without having to enter each transaction manually.

✅Gives You One Centralized Location

Instead of having multiple spreadsheets or paper records scattered across different platforms or files, all relevant information is securely stored within the program.

This reduces the risk of errors or omissions and makes it easier to access and review data whenever needed.

✅Ensure Reliable Financial Reporting

You can also create reports that show a breakdown of your various income sources or compare revenues from different streams over time – providing valuable insights into the performance of each source and helping with decision-making processes.

doola Tip

While bookkeeping software can alleviate all your financial worries, there are many moving pieces you need to keep track of.

Our dedicated bookkeeper sorts your transactions, organize your books, and prepares financial statements each month.

Manage Multiple Income Streams With doola Bookkeeping

Navigating bookkeeping for multiple revenue streams does not have to be a daunting task. With doola, you can streamline your records and make better financial decisions, ultimately leading to success with diverse incomes. 

doola’s All-In-One Accounting will give you access expert bookkeeping resources and real human support, all in one place.

So, you can effortlessly access your financials, make updates, and connect with your dedicated bookkeeping team in one place.

Our team is dedicated to supporting your business and helping you achieve growth and success in all your revenue streams. We’ll keep your transactions in order and provide monthly financial reports. If anything is missing, we’ll connect with you and resolve it for you.

Ready to leave your bookkeeping to the pros? Book a demo with our team to understand how doola works for you.