Trying your hand at the books? Here are a few overlooked tips for entrepreneurs who are doing their own bookkeeping.
1. Stop When You Have Money
“In the very early stages, you might be able to manage your own bookkeeping successfully. But once you have raised money or start to have real revenue, it’s time to hand over the reins to a professional accounting firm. In the long run, it’s more cost-effective to outsource your bookkeeping function to ensure that your finances are being expertly tracked and that your company is in compliance.”
– DAVID EHRENBERG, Early Growth Financial Services
2. Get a QuickBooks Tutor
“QuickBooks can really do everything you need for bookkeeping, but its many features can sometimes seem overwhelming. I hired an accountant to come in and give me three tutorials with QuickBooks to show me all of the great features and reporting functionality. Some people outsource this, but as a CEO, it’s really great to be able to run any report by myself, especially if it shows growth!”
3. Simplify the Bookkeeping
“We have so much technology that there’s a tendency to set up far more programs and systems than we might actually need. Your bookkeeping won’t always be simple, but when it is, take advantage of it. If your business is new and you have loads to do, don’t spend time and money on an accountant when QuickBooks will do. Also, don’t bother with QuickBooks when Excel will do.”
– ALEXANDRA LEVIT, Inspiration at Work
4. Get a Payroll Service
“Don’t do your own payroll! This is the biggest pitfall and waste of time. There are many great services out there that handle the complex and frequent tax reporting requirements. I used Bank of America’s small business portal for more than a year before hiring an accounting firm and never missed a tax payment. Even if you do your own books, don’t do your own payroll.”
– RYAN BUCKLEY, Scripted, Inc.
5. Plan for Long-Term Expenses
“Things such as hardware upgrades or showroom floor remodels are expensive and can throw your business finances for a loop if they’re unplanned and not budgeted. Try to plan for major expenses long before you make them. That way, you can make sure to have the money set aside and potentially reduce the need for outside financing.”
– ANDREW SCHRAGE, Money Crashers Personal Finance
6. Outsource the Work
“Bookkeeping is a service you can easily outsource for minimal cost. You have a lot more important and valuable things you can bring to your business, so find someone else to do it, and keep an eye on them while you work on growing the business.”
7. Monitor for Fraudulent Activity
“If you’re managing your books alone, it’s wise to stay on top of anything that can go wrong as quickly as possible. Before I hired someone else to do it, I used to review all payments that we received, whether it was customers and products or clients and services to ensure there weren’t any fraudulent or peculiar activities present. Reacting to these quickly often leads to resolutions.”
8. Find a Pro to Help
“Why are you doing accounting? Many entrepreneurs can’t answer this question. The truth is if you don’t find any value in it, don’t do it. If you just need someone to file your taxes at year end, find a CPA to do so at year end. If you want insights into your effort, find a pro who takes the time to listen to your desired outcome and can apply his technical skills to deliver it.”
9. Track Your Success From the Beginning
“It’s very easy to look at all of your revenues and costs and see if you’re doing well. What’s difficult is tracking how you are doing per marketing channel (in advertisements, social media promotions and event promotions). By tracking from the beginning, you can see trends which will impact where you should invest and experiment.”
– AARON SCHWARTZ, Modify Watches
10. Keep Everything Online
“Saving receipts is a huge time drain. Buy everything with a credit card and pay it off every month. Use wire transfers, credit cards and online payments as much as possible. Then import everything into QuickBooks. It’s surprisingly easy. We have a lot of transactions, and I’ve been able to keep bookkeeping down to a quarterly four-hour event by making everything easy to track.”
Originally published by StartupCollective.
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Startup Collective
