Once you have setup your business or you bring it up to a level where there are transactions you will need a way of accounting for the money spent and received. But don’t worry too much at the start. Unless you have employees that you pay immediately you need only record the transactions in some way. It can be in a ledger a spreadsheet or some other accounting method. When I first setup a business a year and a half ago I was paying for things from my personal account. Not a good long-term strategy but hey it was bootstrap mode. Since my personal life is fully automated using the free online service at Mint I could daily categorize any transactions directly to the business. I used this report to then enter into my business books 2 months after starting.
When it’s time you need to get a better bookkeeping system. In this post I’m going to talk about Intuit solutions. They are the industry standard and although there are cheaper alternatives out there they are the benchmark to compare other solutions to. There are really only 2 alternatives: a desktop software program called Quicken or Quickbooks or an online SaaS solution called Quickbooks Online. The Quicken solution is mostly targeted for individual finances and not businesses but I have seen businesses use it successfully. The Quickbooks solutions are designed for businesses but be warned the program and its datafile resides on a single computer and without backups puts you at risk for losing your records.
Pricing is confusing and hard to figure out. You have to carefully think through how you will work with this so you won’t over-spend. Right now if you go to Intuit’s website you will find Quickbooks Pro (desktop software) will cost $250), while Quickbooks Online costs around $15 per month. What should you choose? That depends upon both your business, it’s likely growth over the year and you.
If you are good with computers and a fastidious person, meaning you keep a clean computer, in good operation and are religious about backups then you are a candidate to use the desktop version of you like. Where this is a downside is if you have a need for multiple people accessing the books especially from different locations or you have many computers and devices that you use and access your accounts then you should consider Quickbooks Online.
My preference is to use a SaaS solution because I have accountants login at year’s end to do taxes (it lowers the cost because of the easy multi-user access) and can allow others in the company to do things like billing and invoicing. This decision sets you up nicely for when employees start. Intuit Payroll will cost you about $50 per month and handles all the filings for federal and state. In a later post I’ll talk about payroll systems and their advantages. I have started to compile a Guide to back office systems. I’ll be working to populate this and keep it up to date with all the latest systems and services. If you have suggestions, leave a comment and we’ll work on incorporating these into the Guides.