A lot of small business owners aren’t sure where to start when it comes to bookkeeping. They look at the big companies that have their own accounting department, or they look at the cost of having a CPA and bookkeeper on retainer, and they’re not sure they are ready for that yet. Sometimes they freak out, panic, and don’t do anything but shove receipts in a box and try to keep track of income online.
Can you do your own books without losing your mind or messing everything up? Yes. Will accounting software do it all for you? No. But it will make it a much easier process. Here’s how to make it run as smoothly as possible.
Bookkeeping software like QuickBooks Online, Xero, Wave, or Freshbooks are great for online entrepreneurs. Compare the features and make sure it can do what you want it to do. Software that syncs with your bank accounts is great because it pulls in all the transactions so you don’t have to manually type them in.
The software will come with all the accounts you would commonly use (you may be able to enter your industry to get a better fit) and you can add new ones when you need them. For example, if you wanted to track sales for two different product lines or services, you would put them in two separate sales accounts so you could see them more easily.
It takes a little time to get the hang of bookkeeping, but it’s worth it for any business owner. Even if you eventually hire someone to do it for you, it’s a big deal to get that hands-on experience and see the inner working of your finances for yourself.
Getting into the Flow
So you’ve decided to handle the bookkeeping for your online business. Good for you! It’s great to see how it all works, even if you won’t do it yourself forever. Here are a few tips to make it run more smoothly and to make it easier to work with your CPA or EA at tax time.
Get Your Head in the Cloud
Cloud-based accounting software is a lifesaver. It makes it possible for you to access your records from anywhere while keeping them bank-level secure. They can also be connected to your bank and credit card accounts, which lets you download all the transactions and put them into the right accounts, instead of having to manually type in all the information. Another perk is that your accountant or tax professional can be given access to view data and print reports, which is a real time saver for everyone.
Digitize Your Shoebox
I hope you don’t have receipts in a shoebox, but if you do it’s time for an upgrade. Your accounting software should either have a way to upload digital copies of receipts or it should work with an third-party app that does this. You can snap a picture or scan a receipt or invoice, enter a little info, and be done with the paper copy for good. No more shoebox and you can actually prove your expenses when it’s time to get tax deductions.
Ask Your Accountant
You’ll probably have a lot of questions, and there are some great online courses to help you learn bookkeeping, but that’s not what I’m talking about here. When in doubt, you can prevent a mess by using something called a suspense account. QuickBooks calls this “ask my accountant.” Basically, it’s a place to put any items you’re not sure about so you can ask a professional and then move them to the right place. It keeps you from losing them in the books and you can even print a report of all those items to make a call to the accountant quick and easy.
See, it’s not going to be so bad. I’m cheering for you and if you have any questions don’t hesitate to ask.