For Entrepreneurs Who Finally Say “I Need Accounting!”

“I’m tired of Accounting Chaos!”

Many times small businesses put off accounting. It takes time and may be frustrating.  But you may get to the point where you finally say: “Fine, I need to get a better handle on knowing my numbers”.

When you started down the accounting path, did you have these thoughts?

• Hey, there is a sale on accounting software.  I’m going to give it a try.
• I heard that I could take a one-day class on QuickBooks and be able to do all my accounting quickly.
• I’m not sure which version to buy, but I’ll just pick one.

And then, somewhere along the line, you found yourself thinking:

• This is not good.  I have been at it for two days and I don’t want to do accounting any more.
• This is not as easy as “they” said it would be.
• This basic software does not do what I thought it would do.
• Oh no, I think I should input that information but I can’t find the receipt. What do I do now?
• Is there a customer service number for the software?

Hope

It may seem like you are surrounded by chaos, but Yes, there is hope.

If you are an entrepreneur who has decided to put some focus on accounting and you need an accounting system without chaos, keep reading.

1. Create a system to pull information together

Before you even begin using accounting software, you need to get your information in order.  Yes, do this before you think of accounting software.

What Not to Do

If you want to leave chaos behind, I can tell you many things to do, but it really starts with things not to say or do. As new clients come to me, they tell me their prior thoughts… thoughts that did not serve them well.  For example:

• My financials – they are all in my head.
• I throw my receipts in a box and then at year-end, I take them to my tax accountant.
• I don’t reconcile my bank and credit card statements, but they generally look OK.
• I don’t understand accounting software. It looks hard, so I input everything in to a spreadsheet.

We accountants have heard all these statements.  And these are the statements that require more effort trouble-shooting when we  start with a client.

How to Create a Process

So, the first step is create a process of pulling information together. A key is to not only get access to your information, but to get it in a timely manner.   If you want less chaos, create a routine.  Here are specific ideas:

1. Get online access to bank accounts.
2. Get online access to credit card accounts.
3. Create a system of how you are going to track and invoice customers.  It should be down to a routine.
4. Create a system of how you are going to keep track of bills.  How are you going to keep copies?

To get efficiency with accounting, it needs to start with a system of how you are going to pull information together.  As an accountant working with clients, one of my frustrations is  getting information.  If you ask any accountant, the odds are, that is what they will say.  Once we ask for information, many times it takes weeks or months before we get the information.  One of the best things you can do to get started is  get access to your information in a timely manner.  The more information at your finger tips, the better.

2. Commit to accounting software

This may be the dreaded statement for you to hear, but here it is:  commit that you will use Accounting software.

A spreadsheet is not accounting software

Many entrepreneurs start out keeping info in a spreadsheet. This is not what I recommend.

Hey, I love spreadsheets.  But they are not the best way to do accounting.  There is a place for spreadsheets.  There is a place for accounting software.  They are different tools and have different purposes.

Before I started my own accounting firm, I ran accounting departments and created Excel spreadsheets all the time; I still do.  I have taught Excel at colleges. Yes, I am a big fan. But Excel is not an accounting program.  It does not automatically produce the required business reports (Income Statements and Balance Sheets)..  It does not allow you to enter accounting entries and then easily pull up information by different categories.  The sooner you start with accounting software, the better.

Attention Grabber

Here’s the point that is often the attention grabber:  Banks may ultimately demand you use accounting software.  If you want a loan from a bank … odds are they will want information pulled from a true accounting software package and not spreadsheet reports.  They may be lenient at the beginning, but that may stop.

Here’s the other attention grabber:  Information hand-off to your tax accountant can be better if you have used accounting software throughout the year.   When you want your taxes done, your tax CPA may say somethings like:  “Send me your Balance Sheet and P&L reports”.  If you use an accounting software program, you should be able to print reports for year-end taxes without going through boxes of receipts.

Software Ideas

You may have heard of accounting software programs like QuickBooks or Xero. And then there are other packages. I am a fan of QuickBooks desktop.  At this step, I wouldn’t even worry about choosing or buying software. Just commit. The reason: you first need to read Step #3 and consider getting help to set up the software. You need to get the software configured well before you move forward.

3. Configure accounting software – what “they” don’t tell you

As we started out with some of the things you may have been thinking.  Things like: “‘They said it would be pretty easy”.  But then the chaos didn’t seem to end. Let’s start with something I tell many of my clients:

It’s in the set-up!

Why do I say “It’s in the set-up”?  Because the set-up is the foundation for using accounting software.

• If you want greater hope for simplicity, look at the accounting software set-up.
• If you want meaningful reports or the possibility of answering questions quicker at tax time, yes the same tip: make sure the software is set up well.

Many times, the client projects that have been difficult for me are the ones where:

1. Software was not configured correctly.
2. Clients wanted certain reports but they couldn’t get what they needed because the set-up wasn’t done well.

Consider help so you configure it well

When I configure QuickBooks for a new client or review the set-up for a client that already has QuickBooks, I don’t do it by memory.  I have a document that I created listing things to look at. That is how serious I think the set-up is.

Ultimately you are going to choose an accounting software program, but whatever software you choose, make a plan on getting it set up well.  Consider getting help from an accountant–one who has worked closely with small businesses and who can help you with the set-up.

Get some up-front help so you don’t walk away from accounting all together because of frustration.