I’m going to go out on a limb here today in this post about setting up bookkeeping for your new company. I’m thinking that the process is getting simpler every day. Here’s what you do:
|Bookkeeping, Accounting, Etc.|
|If we just used our own language correctly, we’d call it bookkeeping software, because that’s what it is. But no, we call it accounting software. Oh well, no harm, no foul, as long as we know the difference. What we do with our QuickBooks, or NetBooks, or Quicken, or whatever, is really bookkeeping. The CPAs do our accounting. We record checks and transactions and expenses and sales and all, every day, and the accountants interpret it all to do our taxes.|
- Decide which bank has your company’s main checking account.
- Determine which of the so-called accounting software options the bank works easily with. These days most banks will export data to Quicken, QuickBooks or Microsoft Money, at the very least.
- Choose which of these you prefer, and get going.
There are other reasonable accounting options for startup companies. NetBooks is very impressive, developed by Ridgely Evers, who was the original developer of the first QuickBooks. Sage Software has strong offerings. I just picked up a useful review of QuickBooks alternatives from Ramon Ray at Small Business Technology, and he’s reminding us as well that there are some other options.
But the data transfer link with your bank is so important that it probably overrides other considerations. If you can export transactions from your bank’s database, that helps enormously. In the end, the real problem of managing the books is mostly a matter of data entry.
If you are running a business involving products and inventory, make sure you take inventory management into account when you decide which system to use. NetBooks seems particularly strong for that, especially compared with QuickBooks, which is more oriented toward service.
If you have business-to-business sales, you probably have to manage accounts receivable, meaning waiting to be paid by your customers. In that case, make sure you take the accounts receivable functions (aging reports, collection days, etc.) into account as well.
None of that, however, changes the basic conclusion: Use something that works with your bank’s data.