Resolve those nagging issues
As each January that rolls around we tend to reflect on ways to improve ourselves or how we run our business. A fresh year is a fresh start to do something about nagging issues. Perhaps bookkeeping has been your nagging issue?
Is bookkeeping keeping you up at night?
As a small business owner, you know bookkeeping is an essential part of the business but most people don’t find it interesting or fun. So things pile up and one day you find yourself feeling overwhelmed.
To get organized, you basically have 3 choices
- Learn to do it yourself
- Persuade a family member to do it for you
- Hire a professional bookkeeper to keep you on track
The Do It Yourself (DIY) options
Options 1 or 2 above are a DIY situation. With DIY you are dedicating your time and labor to try to save money in the long run. There will be a necessary commitment to learn to use the accounting software and study basic bookkeeping rules, but it can be done. You will want to keep everything as basic as possible to increase the chances you’ll stick with your new habit.
- If your bank allows you to create categories for income and expenses in your online checking account, this would be a free, bare-bones option.
- You probably won’t have any reporting capabilities – just totals by category but this may be enough for the first year of a new business.
- As your business grows, you will want to see a monthly Income Statement (Profit & Loss) to know your gross income (money received), expenses (what is going out) and net income (how much you kept), so you will want to look at professional accounting software options.
Cloud Accounting Software
- I would recommend using Xero rather than Quickbooks. I know you see more advertisements for Quickbooks and may have never heard of Xero. I’ve been certified in both and find Xero to be more intuitive and elegant in design. In fact, Xero was created as a cloud-based software from the beginning.
- Xero’s Early Plan is about $11/month and allows 20 invoices and 5 bills per month, reporting capabilities and unlimited transactions. It also includes Hubdoc which is a digital receipt management tool. Xero has larger plans if you require more functions. Click here for Xero Pricing and here to review Hubdoc.
Chart of Accounts
- For a DIY situation, you’ll want to keep this basic. Take a look at the IRS Schedule C (Profit or Loss from Business) to modify the chart of accounts with titles that match these line items. See IRS 2020 Schedule C.
- A professional bookkeeper would create a customized chart of accounts that identify your business needs and expand your view of revenue and expenses.
Consider your options, then move forward
The important thing is to consider your options and make a decision to move your business forward. Then follow through and do the work, so you can enjoy being organized.
Heidi Scott is the owner of Frugal Fox Bookkeeping in the Lake Norman area offering virtual bookkeeping solutions to service-based entrepreneurs. With over 30 years’ experience in business administration, she has earned an excellent reputation supporting business owners while caring about the success of their business. She creates order from chaos for business owners that have neglected their bookkeeping which saves them valuable time to focus on their thriving business. Heidi is a wife, mother, grandmother and has pet dogs and ducks. In her spare time, she enjoys playing her autoharp.
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