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Should I Use QuickBooks?

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One of the hazards of being an accountant is the QuickBooks question. Wherever I go, the grocery store, the bookstore, the farmer’s market, as soon as word gets out, the question pops up.

It’s understandable what with QuickBooks being the elephant in the small business accounting industry. Too bad the answer isn’t as easy to give.

Not that I don’t want to answer but usually I’m trying to decide what to make for dinner or if that magazine is worth buying or if the corn is just so and can’t turn my full powers of concentration (which are considerable – a superpower of focus) to the questioner. The real problem is that I can’t possibly know all the vital facts around that person’s situation in the minute and a half we’ve talked.

So, I usually give a vague answer like “QuickBooks is really useful and I recommend it frequently but it may not work for everyone.” Wow! Not helpful, huh? I hate that version.

Here’s what I should say instead of that wishy-washy clap trap.

Not Really

It’s easier to say when you don’t need it than when you do. If you have a few transactions, maybe a couple dozen a week, and your dollar amounts are low, less than a thousand dollars per transaction, you really don’t need it. If you’ve been keeping up with a basic system that has all the information and makes your end of year reporting hassle free, there’s no pressing reason to incur the expense and trouble of converting to an electronic system. Same thing applies if you’re using Quicken and are happy with that.

Even those volume and dollar amounts aren’t set in stone. I’ve seen many businesses with relatively high sales that are otherwise uncomplicated operated with low tech systems for years. The catch comes when or if you want to expand or sales and complexity increase.

Yeah, Maybe

The trick to starting with QuickBooks is doing it before you really need it. Unlike paper systems and simple electronic versions like Quicken, it’s a true double entry system and has all kinds of accounting quirks built in where you can’t see them until they’re screwed up. That means you’ll want some time and expertise to get started before you need to rely on it.

When your business grows, in size or complexity, to the point where you’re having trouble keeping all the records up to date, you need to use invoices for billing, you’re adding payroll or you need more detailed and frequent reports that’s when to consider upgrading to QuickBooks.

Just remember, it’s an upgrade and those usually cost money, effort and time. Like most things you have to learn to use the program and I strongly recommend you have a qualified accountant or bookkeeper set up your system so all those hidden accounting type things aren’t broken from the start.

Final Answer

I know, that’s not a much more definite answer than the first but at least it leads to more conversation and questions about the situation. That’s the only way to get a useful answer. Are you wondering about your own situation? Let me know in a note or the comments and let’s see what we can come up with.

Creative Commons License photo credit: Miss Brendalina Badchild

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How to Make Recordkeeping Sexy (or at least Easy) Part 2

The old filing cabinets.  All gone now
Creative Commons License photo credit: mcfarlandmo

In the first part we went over what records are and who they’re really for (hint: it’s not the IRS). Now, we’ll talk about the ONE thing you must have to substantiate your business figures.

What’s The Bare Minimum?

These items are the absolute least you can do to keep your financial records: Check Register, Deposit Book, Bank Statements, List of Assets. Just these few things will help you keep track of some very basic information and make the end of year accounting a bit easier.

Check Register

This is simply the list of checks, deposits and other transactions in the bank account. Most of us are familiar with the small ledger that comes inside our checkbook cover. A business checking account has a slightly different form, but is still the same listing. You may decide to keep this information in a computer spreadsheet, such as Excel, or write it all down in a binder.

No matter its form, this is the foundation for all your financial records and is ESSENTIAL. The list of all transactions in your checking account is the one record you must have. All the other items rely on it for proper completion. If you do nothing else, you must keep this register complete and up to date.

Deposit Book

The deposit book is a separate small book that you receive with your business checking account. It holds deposit slips in duplicate so you can have a record of each deposit made.

It’s good practice to fill out the slip with the check numbers and customer name. Use as many slips as you need, don’t worry about running out. After all, if you are making deposits, that is good thing.

Bank Statements

Most checking account holders receive statements monthly and copies of the cancelled checks may or may not be included. Start off with the very good habit of reconciling your bank account every month. Even if you decide not to pursue a more complicated system, reconciling your account every month will give you a great deal of information.

List of Assets

This is simply a list of the property used in and owned by the business and its value. At first, this may not seem like it is worth bothering with, especially if the business assets are a table and a chair. However, as your business grows, the list of property will too. By starting at the beginning, you can save a lot of work later and have a history of business growth. Be sure to note when assets are sold or disposed of as well.

Expanding file for receipts and invoices

Pick up a regular expanding file with 12 pockets at your nearest discount or office supply store. The easiest way to start is to file all receipts and invoices for the month you paid them.

When do I Start?

Now. Seriously, if you haven’t been doing anything, just start from where you’re at. Everything from the past can be sorted out and from today forward it will be easier. If you’re still in the idea stage, start recording any income and, more likely, expenses and other business activities. Just remember, “Well begun is half done.”

Now, start your records!

This two part post is available as a free PDF if you want to print it out for reference.

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How to Make Recordkeeping Sexy (or at least Easy)

escrow papers (photo tip #3)
Creative Commons License photo credit: billaday

So many new, and not so new, business owners are confused about keeping records sometimes to the point of being paralyzed into inaction. This two part post will answer your questions and give you the confidence to get going on your business. After all, what’s sexier than someone doing something that they love and believe in?

Why Should I Keep Records at All?

Good Question! You can certainly pursue your business idea without giving much time or thought to the subject of record keeping. However, your chances of success are much slimmer. The truth is that businesses that have a systematic method of keeping track of important information are much more likely to succeed.

A financial record keeping system allows you to understand and act on changing conditions in your business. Your failure to see a downward trend early and correct it can lead to a disastrous end. On the up side, seeing positive trends and capitalizing on them will help you make the most of your business idea.

How About the Internal Revenue Service?

Ah, the Internal Revenue Service (IRS). Many business owners make the mistake of thinking that bookkeeping is to satisfy the IRS. This is simply not true. Any system for records and financial information should first and foremost provide the owner of the business information necessary to properly run that business. Any other use is secondary.

Actually, the IRS does not require that you keep your records in any particular fashion. The government requires that you report all taxable income and properly pay the taxes due on that income. Further, you are required to keep records that will support the income and expense items reported. In some cases, taxpayers are required to use particular methods of reporting income, but these cases are generally for businesses with revenues in the millions.

As long as you use a system that allows you to properly report your income and expenses and you are able to support those figures, your system passes muster with the IRS. There is no need to fear the IRS, but a healthy respect is a good attitude to cultivate.

In the next part, we’ll talk about the ONE thing you must do and a few others that are nice to have in your basic records. In the meantime, if you’ve got a pressing question or problem, drop me a note or post a comment and let’s get to work on it.

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When is Paper an Immoveable Object?

level 36 bureaucrat
Creative Commons License photo credit: me and the sysop

When it keeps you from your goals. So many people I work with are waiting – on hold. They say “I’ll be ready to go when my business cards are finished,” or “I’ve got to get my brochures ready before I can start.” The paper, or lack of it, is paralyzing.

Let’s face it, starting a business can be scary and anything we find that delays the big moment of saying “I’m in business” keeps us comfortable. The comfort is extended but so is the paralysis.

Stuff You Don’t Need to Start Your Business

  • Business Cards
  • Flyers
  • Marketing Material

Yes, it’s nice to have these tangible notices of being a legitimate business owner but the real validation is in your own belief. When you say it, it’s true. The more you say it, the more you believe it and so will everyone else.

What paper are you looking for? Let me know in a note or a comment and let’s see how to get around that obstacle.