If a Shoebox is Your Bookkeeping System, What Happens When Business Picks Up? Smart Business Thinking by Jim Whelan

Smart Business Thinking by Jim Whelan

If a Shoebox is Your Bookkeeping System, What Happens When Business Picks Up?

When starting a business you wear all the hats. Since you’re in business to make a profit, finance is one of your responsibilities. Keeping track of income and outflow is the only way to keep score, and that involves a bookkeeping or accounting system. Set up the system as one of the essential first steps starting the business. 

Many thanks to John Bowen, Bookkeeping & MoneyManagement, of Arlington as he unraveled the complexities of bookkeeping for a small business at The Arlington Chamber of Commerce’s recent Roundtable.

 John uses a step-by-step method of selecting the appropriate bookkeeping/accounting system.

Questions to ask in setting up a bookkeeping system:

·      Step #1.  Determine the type of legal entity to establish: Corporation, Partnership, Sole Proprietor,
     or LLC?

·      Step #2.  Will you have Employees, use Independent Contractors, or hire Subcontractors?

·      Step #3.  Will you collect Sales Tax? Need to Track Inventory?

·      Step #4.  Do clients/customers pay immediately or in stages?

Common problems small businesses experience are:

a.  Keeping up to date on income includes tracking when invoices are sent, paid, and deposited.

b.  Prompt reconciliation of bank and credit card statements is essential. It is easier to catch an error in one month than searching through three or more months for the problem.

Popular Software options:

QuickBooks    Pro (Windows) and for Mac  $180

·      Broad array of reports (including complete balance sheet)

·      Handles employees and independent contractors   (prints W-2s and 1099s)

·      Handles sales tax

·      Tracks inventory

Quicken Deluxe (Windows) $60 and Quicken Essentials for Mac  $50

·      Can combine personal and business transactions, and do reports on each

·      Better for downloading

·      Better for tracking investments

·      Can include personal and business bank and credit card accounts

Quicken Home and Business (Windows)  $90

·      Does invoices and tracks receivables

·      Tracks sales tax

Cloud:  QuickBooks online  ($40 per month)

·      Expensive but is efficient if more than one location is using the system

The Bottom Line

The time to set up the booking/accounting system is at the start and set it up for the business it is going to be.

Jim is an expert business coach and a respected advisor management and financial executives. He draws on his long-term business leadership background to help CEOs grow revenue, increase profits, improve performance.