When is shoebox accounting no longer enough? Just as soon as you go into business.
Yes, you hate accounting. Almost everyone does. That doesn’t mean you don’t need to understand what is going on with money in your business.
I don’t care that the only CPA in your town is your ex-sister-in-law. I don’t care that your small high school didn’t offer accounting classes. Don’t tell me you “outsource all that finance stuff” so it’s OK to have no idea where you stand.
Responsibility still stops with you. You have to know enough to keep your business afloat because you are the only one who cares about your business.
1. Start today.
It’s still near the first of the year, and it will be easier to do it right all year than to dread your end-of-year catchup.
2. Pick a modern online system.
An awful lot of us who rapidly adopt the latest tools in our favorite niche continue to labor over outdated and outmoded accounting software that has us typing in every transaction by hand, or worse yet, we’re still on paper. Stop.
Do not, for any reason, settle for an accounting tool that requires you to type in transactions. There are tools available now that will connect to your bank or PayPal account and suck in all your transactions with zero effort on your part. If your bank, like mine, is too small town to integrate automatically, then you can still export your transactions and import in your new accounting tool with very little effort. Either way, it’s only up to you to categorize transactions. The same integrations work for credit card accounts, PayPal accounts, and others depending on which accounting tool you select.
Do not, for any reason, choose a patchwork of apps to cover the different record-keeping jobs. Don’t pick one service for invoicing, another app for expenses and receipts, and a different tool to handle payroll. Who is going to bring all that data together? You want a system that includes all the functions you need in one place and comprehends the dreaded “double entry bookkeeping.” Modern tools are smart enough that you won’t ever have to see the double-entry end of it, but you need it behind the scenes keeping your data in order.
I like WaveApps online. It’s designed for businesses with 9 or fewer employees, or no employees at all. It includes invoicing, the ability to accept payments, and payroll so you don’t need separate apps. It also will scan your receipts in and help you turn them into transactions. Their site is easy to use on an iPad, and they have iPhone apps for payroll, etc. All of these work together to keep your company data up to date.
There are other workable systems available, including Outright by GoDaddy, Intuit’s QuickBooks ecosystem and several upstart companies. Try one or two. Find the one that fits your brain and your business the best.
Once you find the right system, you can get into a routine.
3. Set up a routine and stick to it.
On the first of every month, categorize the previous month’s transactions. This is mostly a point-and-click exercise, or tap-tap on your tablet.
On the first and 15th, set bills to pay in your online bill payment system. If your accounting tool offers reminders of bills due, use it. Otherwise, note in your calendar what amounts will be coming out of checking on what days.
On the first of every month, run an income and expense report for the previous month. Look at it. Read it. Did you cover your expenses? Why not? What can you do today to make the numbers look better (and your business run better) by the end of the month?
Now is the perfect time to get started. So your assignment is to take out your calendar or open your calendar app.
- Schedule one hour tomorrow to research WaveApps or another system. Make notes of what you’ll need to get started.
- Schedule one hour within the next week to do the initial setup.
- Schedule one hour the next week to classify transactions and do any further setup.
- Schedule time on the first and 15th of every month to do your books.
- Schedule time on the first of the month to run your income and expense report and spend time planning how you’ll improve this month.