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All small businesses – whether home-based solopreneurs or brick and mortar establishments with 48 employees – need a way of tracking expenses and assessing the financial health of the company. Shrewd business people watch their company’s money. Your business is no exception.
Bookkeeping is crucial to both your profitability and your peace of mind when you’re running any type of business. But bookkeeping can feel like a steep mountain to climb when you’re not a bookkeeper. Where do you start? What do you need? And how much is all of this going to cost.
Let’s be clear here: Investing in a bookkeeping program will cost you less than an audit and a fat tax bill. And even just taking baby steps with your bookkeeping is going to help you minimize the costs of having an accountant try to make sense of your “filing system” (i.e. that garbage bags full of receipts) when the first of the year inevitably rolls around.
I got you.
Here is a rescue plan for those of you who are still tempted to stick your receipts in a shoe box, or worse, a garbage bag. I’ve found four robust bookkeeping solutions that are super-inexpensive and intuitive to use.
This is the big boy in the market. QuickBooks has been an industry leader in accounting software for well over a decade. QuickBooks is full-featured, but it’s not hard to use once you get a few accounting basics down. QuickBooks Online’s cloud-based application integrates seamlessly with your bank and PayPal accounts, which is one of my favorite features.
For those of us who were using bookkeeping programs 10 years ago, you know there was A LOT of data entry involved. Today, much of the heavy lifting is done for you. The fine folks at Intuit have designed this product so that it automates the data entry process. QB downloads your bank transactions then automatically groups them into tax categories. BRILLIANT! So, if I paid my Georgia Power bill for my office, QuickBooks recognizes it as a utility. If I slipped out and used my PayPal card to get a movie from Netflix, QuickBooks knows it’s a personal / entertainment expense.
Intuit rolled out the Self-Employed edition of the cloud-based software for $10 per month (as of this edit, you can grab that edition for $5 a month for the first six months). Compared to the Simple Start plan, which used to be the bare bones QB subscription plan, the Self-Employed version has several key features that are specific to that plan, namely:
- The ability to separate business expenses from personal expenses
- Calculate and pay quarterly taxes
- Track mileage for Schedule C deductions
The one big drawback I see to this plan is you can’t send invoices and estimates to customers. Newbies can test drive QuickBooks with a free trial. Worth it. QuickBooks is, by far, the smartest bookkeeping solution I’ve used.
Just an aside: I personally use WaveApps since things are pretty straight forward for me as an independent contractor providing a service. But I am a certified QuickBooks Pro Advisor (I do love bookkeeping) and I always recommend QB for small businesses that do lots of transactions.
Formerly Peachtree Accounting, Sage One runs a flexible cloud-based accounting application designed specifically for small businesses. Currently, Sage One offers three tiers of service. The mobile-only version of the software is absolutely free and tracks income and expenses. Next, is the Start level for $16 a month. In addition to recording your income and expenses, you can also perform bank reconciliations. For $33 a month, the Accounting level adds invoicing to the mix.
What’s interesting is last year around this time, you could get a full-featured standard plan for free. At the free level, users could track customers, integrate Sage One with one bank account, generate unlimited estimates, send up to 5 invoices per month, receive payments through Sage Payment Solutions or PayPal, and generate reports.
The platform also allows you to back up invoices and estimates to Google Drive.
After QuickBooks and I broke up, I tried FreshBooks for a while and the program worked well. It’s a great tool for people who are transitioning into bookkeeping and looking for a soft landing place. But for me, coming from a QuickBooks background where I can track even the serial numbers on the desks in my offices, FreshBooks didn’t feel like it provided enough “coverage” for me. I was used to an inordinate amount of record keeping and number-entering and FreshBooks was far more laid back than I was used to.
Since its inception as an online accounting solution a decade ago, FreshBooks has grown to more than 10 million users in 100+ countries around the world. One of the things I love about FreshBooks is the pricing structure is as clear and straightforward as the platform itself. All three subscription levels offer the same basic features with the difference between them (and their respective monthly subscription fees) being the number of active clients you can bill.
FreshBooks integrates with your bank accounts and PayPal and automatically assigns tax categories to income and expenses downloaded from your bank. This is the easiest bookkeeping tool I’ve ever used and super intuitive.
Wave Accounting Software
Wave Accounting is a freemium solution that does a pretty good job of tracking and managing my income and expenses for me. Wave handles invoicing, reports, expense tracking, and automates the process of inputting receipts with a scanning app called Wave Receipts that works together with the cloud bookkeeping system. Wave offers a healthy selection of features, comparable to what you would get with QuickBooks and counters that with FreshBooks usability. And it’s free! Double bonus.
So, you have four hefty options with small price tags. Even at the starter level, QuickBooks, Sage One, Wave Accounting and FreshBooks will give you enough coverage to track your spending, monitor income, get a snapshot of your business and quite possibly dodge the tax man.
This is true whether you run your business out of your garage Bill Gates-style or let “your people” handle the small stuff as you sip imported water and stare out over the city from your office in a Downtown skyscraper.
If you’re not managing your money, you will never be in a position to leverage your business or expand it. The good news is you can keep an eye on things and easily track what comes into your business and where it goes for about $0.32 per day.
So get on it.