Are you a self-employed or currently running your own business? Having established your business is a rewarding experience. Doing the work, you love; making your own schedule; making decisions to make your business successful; having the potential to earn higher income compared to being employed.
However; like most entrepreneurs and as your business grow; you find yourself drowning with paperwork. In most situation, as an owner-operator, you neglect some areas of your business. Most likely, you will just file or store most paperwork such as receipts and invoices and will deal with it during year-end to file your taxes. And it seems to work anyway, your business is running and you don’t bother yourself with the paperwork.
But do you sometime wonder during the year how your business is really doing? Having question like “Why is my business always running out of cash? I been selling a lot but I always feel that I am not generating enough cash.” There are several reasons why this is happening in your business; it can be a simple as you failed to monitor your business expenses that you could have avoided or as serious as an employee committing theft. Unfortunately, if you don’t keep a good accounting record, you may never find the answer to your questions until it is too late.
A lot of wrong decision or problems in the business can have easily been corrected or avoided if business owners and managers will keep a good accounting record and use it to monitor and control the business. Below are some of the ways and tools you can use in order to accomplish this.
If you know basic bookkeeping and knows your way around an excel spreadsheet, you can probably do a basic record keeping of all business transactions in excel. A simple spreadsheet that have the necessary information per transactions (e.g. date, sales taxes amount, net amount) are all you need. It will of course be helpful if you organize all your supporting documents (e.g. receipts, invoices) in a systematic way such as chronologically. If this is you but don’t want to start from scratch, I’ve created a simple excel template that I can share with you; email me at firstname.lastname@example.org.
Income and Expense Trackers
There are a lot of income and expense tracker app available for free with some limitations; however, it is either an income or expense tracker, which means you will track your income and expenses in two different apps. Each app offers different features that will basically makes your income or expense tracking easier for you. Below are some income and expense trackers that you can try out.
- Invoice Simple (https://www.invoicesimple.com/)
- Invoicely (https://invoicely.com/)
- Invoice Ninja (https://www.invoiceninja.com/)
- Money Manager (https://moneymanagerapp.com/)
- Mint (https://mint.intuit.com/)
- Clarity Money (https://www.marcus.com/us/en/clarity-money)
Full Accounting Software
Once your business grown and it is getting more complex, it maybe the time you consider to implement and use full accounting software. Software that offers features like maintain full record of your accounting chart of accounts and handling most accounting task, I consider as full accounting software or simply accounting software. Most accounting software will help you with all your business accounting needs; from invoicing your customers, managing your payables to suppliers, paying your employees, etc.
But keep in mind that having an accounting software will do all your accounting/bookkeeping for you. I have seen a lot of business buy/subscribe to use accounting software but ending up messing up their accounting records. This maybe because of incorrect set-up of the accounting software at the beginning or using some features of the accounting software incorrectly.
Unfortunately, most of the businesses that develop and sells these accounting software advertise that if you use their product, everything will be easy and will automate things; which is technically not true. Remember, their goal in advertising their product is generate more sale; thus, not providing potential customer the whole picture is not surprising. For me, an accounting software is a tool that accountant use to make the work easier but not to be considered a replacement of the accountant. Of course it depends on the accounting knowledge of the business owner, if the business owner have some basic accounting knowledge and can do things such as the day to day bookkeeping of all transactions, then of course he can maintain the accounting software. This is similar in our home if we have the proper tools and knowledge to some small projects, then we can definitely do it ourselves. But if there something major that needs to be done in our home; even with the most sophisticated tools; we will still call a tradesman do the job properly.
In summary, I do suggest that if it’s time for your business to have a full accounting software; consult an accountant on how to set-up it and have the proper training to utilize the software properly. Below is a list of accounting software small to medium size enterprise can use, some do offer free version with some limitations.
- QuickBooks (https://www.intuit.com/ca/)
- Sage (https://www.sage.com/en-ca/)
- Xero (https://www.xero.com/ca/)
- Wave (https://www.waveapps.com/)
- Akaunting (https://akaunting.com/)
If you have any accounting or tax concern; feel free to contact me at email@example.com or visit our website at www.bridgingnumbers.ca