Everything You Need to Know
Most entrepreneurs hate the idea of bookkeeping. In fact, TD Bank surveyed over 500 small-biz owners to find out what they liked least about running their own businesses, and bookkeeping won, hands-down.
However with the help of modern software and a knowledgeable professional it doesn’t have to be all that bad. In this article we’ll cover some bookkeeping-basics and give you the information you need to keep your brand in tip-top shape. Enjoy!
Before we explore solutions, let’s first figure out the problem. Why is it that bookkeeping gets such a bad rap?
Most people don’t know how to do it properly. Sure, it’s not rocket science, but doing your books correctly does require a fair amount of accounting knowledge.
When folks aren’t totally comfortable with a given task, they tend to put it off. Unfortunately, that only makes things worse. Trying to sort out expenses months after the fact isn’t only frustrating and time consuming– it seriously increases the chance of missing or misallocating data points, which can have expensive repercussions.
Bookkeeping, in general, doesn’t add anything to the bottom line, so it doesn’t feel as important as other activities. It also just isn’t as much fun as coming up with a new product idea or marketing campaign, and it’s more stressful than doing some filing or ordering office supplies.
Many entrepreneurs’ beef with bookkeeping comes from their awareness that they should be more adept with it, and that sooner or later they’re going to have to face the frustration head-on. This looming stress can understandably sour people on bookkeeping altogether, but once it’s finally all sorted it’ll feel like a massive load off.
So, what are your options for overcoming these issues?
The first is to invest some time in getting the books set up correctly, and then getting some training on how to actually do them correctly. The training doesn’t take long and can be done a variety of ways (books, seminars, video courses, online tutorials) to fit your schedule and preferred learning style.
It’s funny– tasks like these tend to feel a whole lot less intimidating once you learn how to do them properly. After a few hours spent exploring your accounting software, you might find you actually enjoy it. Many business owners actually look forward to tracking their progress through hard data!
Another option is to task a reliable, detail-oriented employee with some or all of the bookkeeping work. This route allows you to benefit from having accurate and up-to-date books without having to do the tedious tasks yourself!
The third option is to outsource your bookkeeping work– and there’s no shortage of options here. Choosing a good accountant is the subject of a whole other article, so we won’t dive in too deep now. But generally, this is a great option for those with a little extra money to spend. Assuming you choose a good accountant, outsourcing this work will ensure that you get professional quality, and will leave you the time to spend growing and managing your business.
Here’s a short list of the most common small-business accounting mistakes. Hopefully seeing these now will help you avoid them altogether!
Think of your small business like it’s a bedroom: you can either keep it tidy and organized, or get lazy and leave clothes all over the floor, the bed a mess, and food crumbs in the carpet. It’s important to keep the mess from accumulating in your financials. Find ways to keep yourself accountable for establishing and maintaining financial organization in your workflow!
Most accounting software these days are pretty amazing, and they’re only a couple hundred bucks a year. The only thing is, you have to actually learn how to use them. Thankfully there are options like FreshBooks and Xero, both of which are super intuitive and include plenty of free training materials to help minimize the cost and learning curve. (Check out our FreshBooks Review and Xero Review for more information!)
Maybe learning how to leverage contemporary, cloud-based accounting software isn’t right for you. Maybe it’s something you should delegate to a qualified professional. In the end, outsourcing your bookkeeping is probably cheaper than the cost of stunting your productivity!
Listen, if you don’t have a budget, how in the world do you expect to compete? Obviously there’s a limit to what you’ll spend, you just haven’t planned, forecasted, and structured it yet. If this applies to you, map out your budget already! Accounting software can make this a walk in the park.
Is Xero an astounding tool? Absolutely– but don’t make it a crutch. Don’t start thinking that some algorithms are responsible for your resources, marketing budget, etc. Remember, good software is designed to allow you to curate and customize your financials with as much functionality as you need!
Oh boy… it’s typically solopreneurs who walk into this quagmire. It tends to happen unintentionally, until they learn the hard lesson come tax time or a business emergency. At this point they’ll realize they need to set up dedicated business accounts and sync them with their accounting software.
Otherwise known as human error. Accounting software can perform astounding magic with your numbers, but in order to do that the numbers need to be accurate. Once you sync your business bank account and credit/debit cards with your software this becomes 100x easier.
When it comes to maintaining the financial health of your business, hiring accountants and using accounting software are both undeniably helpful, efficient, and cost-effective options. Many entrepreneurs disagree about which one’s ideal, but the end result is the same – you’ll be able to take care of your business expenses more proficiently.
That said, let’s discuss the advantages and disadvantages of accountants and accounting software to help you make the right decision!
There’s a simple question you need to ask yourself: “Do I want one-on-one assistance, or prefer a tech solution?”
Most people would prefer to work with a professional accountant. That said, we encourage you to keep reading before you decide!
If you’re the tech-savvy type, you probably jumped for joy when accounting software started coming out. However, they’re not for everybody.
Some people are freaked out by the word “software” or skeptical of technology altogether– and really, who can blame them? Let’s take a look at some advantages and disadvantages of using accounting software.
Regardless of which route you choose, the most important thing is that you feel comfortable contributing to the accounting process. Always remember that it’s important to stay hands-on, and not to rely 100% on any service!
Matt Remuzzi is the owner of CapForge Bookkeeping, a full-service nationwide bookkeeping service that specializes in high quality, highly affordable service for small businesses and startup entrepreneurs. Matt has a popular QuickBooks book on Amazon and you can find him on Twitter daily. If you have any questions, he’d love to hear from you!