getting your business set up, you’ll likely realize sooner rather than later that you have expenses. Expenses come in all shapes and sizes. From your domain registration to office supplies to marketing material, the flood gates do not take long to open. Hopefully, if all is going to plan, you’ll also start seeing some revenue headed your way as well. So, what do expenses and revenue have in common when it comes to starting your business? They both need a home when it comes to organization and storage (yeah, I know, that’s not all they have in common. Stay with me here).
Is a very important aspect of any company. By tracking your income, expenses, vendors, invoices and more, you’ll be positioned nicely for tax season. If you choose not to organize and track your income and expenses, trust me, tax season will become even more unpleasant than it is now. One of the bigger challenges for many people starting their business is the lack of experience when it comes to accounting. Chart of accounts, balance sheets, income statements, expense accounts, journal entries…the list of terminology goes on and on. Accountants are really good at this stuff. Accountants can also charge you a fairly hefty hourly rate. On top of that, just because you have an accountant doesn’t mean your tracking your income and expenses yet. Many software systems and applications exist for this very reason alone. It’s easy to become overwhelmed at this point.
do exist. When it comes to my new business, I had the advantage of failure in the past. I also have leveraged what I’ve learned in my day job to help me position my new venture for success on the accounting front. Where did I start? HOMEWORK! I read, read some more, asked questions, read, asked more questions, and then read even more. From online articles to books on accounting, I took the time to study. I also reached out to my personal accountant for pointers here and there (fortunately she’s an awesome lady who didn’t tack on an invoice for advice). Once the homework is behind you, the next step is selecting your accounting platform. If you’ve never had the pleasure of reviewing these, I’m going to give you my very short list.
I’d recommend includes:
- Wave Accounting (www.waveapps.com) – This cloud-based solution is totally free and is really easy to use. Not only do they have accounting solutions but the also offer Invoicing, Payment, and Payroll solutions (some of these may have fees). Personally, after using QuickBooks and NetSuite for similar purposes, I’ve decided to use Wave Accounting for my new business.
- QuickBooks – https://quickbooks.intuit.com/ This one is known the best in the market. I’ve used it for many years and haven’t had any issues to speak of. Once you hit a certain threshold in your business (somewhere between $5m and $10m in annual revenue), you’ll likely start hitting some limitations with this solution. But hey, that’s a good problem to have. The downside to QuickBooks is that it’ll cost you somewhere between $60 and $360 per year depending on the option you choose.
Many other options exist for accounting software. Xero, Zoho Books, and FreshBooks are a few more that show promise. You’ll need to allocate some time digging into the various options and picking the best one for your needs. Whatever solution you go with, be sure you get all of your reporting needs included as well. While the basics like Balance Sheets and Income Statements are included, more advanced reports may end up costing you a bit more depending on the solution.
Don’t skimp on your accounting. The solution and software you go with may not cost you a penny but be sure that the IRS and your state government likely won’t accept excuses if/when your books aren’t in order.