Quickbooks
Dear Readers,
Michael is just starting up his business and recognizes the fact that he lacks accounting acumen, particularly in bookkeeping. He asks, “are there any bookkeeping tips you would give small businesses?”
Josh: Michael clearly recognizes the fact that if you have good financial records, you will be able to manage debts, deposits, and items given on credit by using invoices recorded. Without proper management of all your business finances, you may end up bankrupt before your investment even expands. Warren Buffett, the world’s richest investor once said that “accounting is the language of business” and there is certainly truth to that statement.
Pedro: I agree with that too. The most successful small business owners attribute part of their success to excellent record keeping. They track every expense and every deposit that the business incurs so as to minimize unnecessary costs and hence lower the cost of running the business. On the other hand, having good financial records will make it less likely to pay taxes on money that isn’t income.
Josh: So what would you recommend to business owners like Michael, Pedro?
Pedro: First, a business owner must relentlessly track business invoices. As the owner of the business, you know that late or unpaid invoices will immediately hurt your cash flow, and ultimately the general health of your business. Don’t allow clients or vendors to stay with your money for long. Secondly, business owners should also separate receivables – the money that customers owe the business for work done or goods received – from borrowed funds. Mixing of funds by clients together with the funds that the business has borrowed might lead to confusion and problems later on. Lastly, successful business owners allocate time each week to review their books. This will keep you updated about the state of your business. By doing so, you will be able to manage your cash flow, get to know your weekly expenses as well as be well informed about current invoices. Reviewing your books regularly also allows you to monitor and evaluate weekly income and expenses incurred by the business.
Josh: Those are three great suggestions, Pedro. I would also suggest that you find some simple accounting software, which has the ability to keep records of both income and borrowed funds separately for easy and quick follow-ups whenever needed. This will help you keep track of what is yours and what the business is owed. A good software program gives you a chance to access your financial status anytime.
Pedro: You can choose to go the DIY route and use a bookkeeping software like Quickbooks. Or you can outsource a part-time bookkeeper that’s either local or cloud-based. Most businesses tend to do the DIY method initially. The trick with the DIY approach though is self-discipline. You’ve got to stick with it, even when it’s more fun, satisfying or just plain easier to work on the business itself!
Josh: You mentioned Quickbooks. Other options for online bookkeeping software you can use for your business include: Kashoo, Invocera, Xero and Quickbooks online. Are there any software programs you would recommend?
Pedro: Yes. Quickbooks tends to be the most popular. And as a matter of fact, the HEDC is starting a new “Basic Accounting and QuickBooks” class on August 21, which is taught by a certified QuickBooks ProAdvisor. This is a 6-week course for small business owners wanting to take control of their financials. The class meets Tuesdays and Thursdays from 6:00-8:30pm and only costs $150, which covers materials and snacks. Some scholarships are available. To register, or for more info, contact Sonia Lopez at slopez@kchedc.org or 816-221-3442.
Josh: Sounds like the perfect way to get started – and to take some of the fear out of keeping your books!
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