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Ask any entrepreneur why they went into business for themselves, and you’ll get a hundred different answers, but odds are pretty near even that, “To do bookkeeping,” is nowhere on that list. But proper bookkeeping is the core of any successful business, it is a way to tangibly measure growth, keep cash flow positive, and track expenses to ensure you don’t overpay your taxes.
“Bookkeeping is like learning the piano: Hard to learn, easy to master,” says Brian Wendroff, Wendroff CPA President. “The secret is to learn the fundamentals and create a system that works for your company.”
While it’s up to you to create the system, these eight tips should have you bookkeeping like a virtuoso in no time:
Use the Right Software
Forget (heaven forbid) spreadsheets, today countless options exist to keep track of your books. QuickBooks offers Simple Start, their free version of the popular software, or you can use several online editions from QuickBooks, FreshBooks or WorkingPoint, which all offer scaled down free versions.
Automate Your Invoicing
Several online invoicing services such as FreshBooks, Bill.com, Blinksale and QuickBooks Online allow you to schedule invoices for clients you charge contracted monthly fees to, saving you time and cutting down on errors.
Don’t Mix Business and Pleasure
Getting a business credit care not only separates your business expenses from your personal, but you also build business credit and points. We like American Express and Chase Visa, which allow you to automatically download transactions into your bookkeeping system for automated month end inputting.
Keep it Simple
You might be tempted to over-categorize your chart of accounts (office supplies vs. itemizing your fax, paper, letterhead, printer supplies, ect. ect.), but resist the temptation. This will complicate your profit/loss and add time to your bookkeeping.
Schedule Important Reports
Some bookkeeping systems like QuickBooks Online allow you to schedule reports such as your Profit/Loss, Balance Sheet and Accounts Receivable Aging to a schedule of your choosing (daily, weekly, monthly) and email them to various recipients. This can also act as a reminder for due dates such as your state sales tax.
Pimp My Report
Some bookkeeping systems allow you to customize important reports to include key information. One report we suggest is a customized A/R Aging that includes contact info, so you have all the information in one place. Then schedule that to arrive monthly at your A/R clerk to follow up on late invoices.
Use a Payroll Service
Once your business starts to grow beyond you as the only employee, payroll jumps exponentially in difficulty and can lead to heavy fines if done incorrectly. Outsource your payroll to a professional company such as ADP, Payroll or Integral HR to avoid the headache. Shop around to get the best rate.
Hire a Bookkeeper
We know what you’re saying – “Why’d I waste my time reading these last seven tips?!” Knowing how your books work is just as important as investors knowing what Madoff was doing with their money. But hiring a professional bookkeeper provides a second set of eyes looking at your books and frees you up to focus on growing your business instead of working for your business.
Wendroff & Associates, CPA can set full service online bookkeeping systems starting at $220 a month. For more information, please contact an associate at Wendroff & Associates at 703-553-1099. Also, please look out for our Online Entrepreneurship Series in 2009, which will include educational webinars, our online Ask a CPA series and podcasts with leading entrepreneurial minds around the country. The programs will all be free and online.