Running your own business means keeping track of the money. You hire somebody or you do it yourself. You have to pay taxes, so you have to have records. The mythical pile of papers in a box is romantic, cute perhaps, but really dumb if you’re building a business. Not keeping track of every business transaction is going to cost you a lot. Under-reporting costs and expenses means you pay more taxes. Under-reporting income means you just broke the tax law.
- You need to use software. It will do data entry of checks and receipts and such, so it’s really bookkeeping, but they’ll call it accounting software.
- Everybody hates their accounting software, and so will you. Regardless of which software you use, you’re going to hate it. But you need it, so deal with it.
- Which software package you choose isn’t as important as you think. What is important is that you choose one and start working with it.
I worked with a man who drove an otherwise promising robotics venture into the ground over this. He was great with the technology and pretty good with customers, but terrible at administration. “Jim, are you paying employer taxes?” He would roll his eyes or curl his lips. “Of course, of course,” he’d say, but what he meant was “don’t bother me with that trivia, I have a company going up here.”
The business died within a year, and when it did he inherited more than $90,000 owed to the IRS. And yes, by the way, his company was incorporated but the IRS pierced that so-called corporate shield like a knife cutting hot paper. Don’t mess with the IRS.
So, if you’re starting up, you have three choices: you can include somebody in your team who does this, or you can hire a bookkeeper at an hourly rate, or you can get some bookkeeping software and start keeping track of things yourself.
You decide which is right for you. The team member is appropriate for the building something or trying to fly startups; but do-it-yourself or the hourly bookkeeper are the main options for the just get going startup. You can’t not do it.
If you’re going to do your own books, then I’d like to give you a simple recommendation on which of the major competing software products to choose, but I can’t. I don’t think it makes that much difference.
What does make a huge difference, however, is the link to your bank. I strongly suggest that before you choose software you first check with your bank, and you then choose whichever one of these can link up to your checking account electronically to relieve the problem of data import.
This is much more important than any of the differences between the various packages. For sure the soft white underbelly of keeping the books is the annoying problem of data entry, and no feature is going to compensate for the luxury of sucking the data up from your bank into your books automatically, without having to type each record. That’s magic, and you want it, almost regardless of other features.
I will say that my underlying dislike for all of the packages hasn’t been acquired without some work. I’ve been dealing with this for 30 some years. I kept my own books by hand for several years, with loose-leaf binders. In my defense, that was before personal computers. I also wrote a complete general ledger system in cbasic. I’ve worked with Quicken, and QuickBooks, and Accountant Inc, and SBT, and Microsoft Money too.
Intuit, QuickBooks, has just started this week a free offer of its new SimpleStart, which seems (I haven’t used it) like enough to get you going. However, there are other good choices, and free is not that important when full cost is $50-$100 at most, and you’re going to spend a lot of time with it, and the key factor is import from your bank statement.
Two days ago I met Ridgely Evers, the original author of QuickBooks and founder of NetBooks, and if NetBooks is as impressive as he is personally then I’d recommend that one–again, as long as it works with your bank. It does include a monthly fee, however, rather than a one-time purchase.
QuickBooks is the market leader for small business accounting, but Peachtree, owned by Sage Software, has some very credible offerings, and Microsoft Money is also competent. Sage is actually bigger worldwide than Intuit, but Intuit is bigger in the US, and of course you’ve heard of Microsoft too. They’re all pretty good, and they’re all easy to hate. And you need to choose one and get going.