Entrepreneurs generally have a variety of pressures all around them. In the beginning, you are responsible for everything. Selling and buying take up most of your time, while the accounting function is seen as a waste of valuable time. Startups are limited in their time and energy and I am here to tell you that you do not have to settle for bad accounting records. You must simplify the process.
In business you must continually work on beginning with the end in mind and this is no different for your accounting processes. Accounting is a very important part of business because the result is a financial statement that quantifies your business efforts. If designed correctly, you can glean valuable business information from it as well. It’s a must-have for all businesses.
Here is how to simplify your accounting and reduce the time you spend on it:
1.) Start with your Chart of Accounts.
When working with startups this is one of the biggest questions I am asked. There are dozens of accounts and you can scale it down to the smallest detail. My answer is always is to keep it simple. If the additional account is not going to help you make a business decision then don’t add it. Period. Many software packages have a pre-setup chart of accounts and usually it’s the simplest form. Go with the recommended chart of accounts and modify if you need more accounts later. It does not have to last you a lifetime.
2.) Use accounting software that will be simple to use.
In the past year I have been amazed at all the options we now have as business owners. The industry has been ripe for change and what was once dominated by QuickBooks has now opened up to many new options. Xero.com is one of my favorites. It’s simple to start and provides many options like auto-download of bank transactions and a mobile accounting function. You can now do all of your accounting from your mobile phone. These are both great options for a busy entrepreneur. No more late nights sitting and doing data entry into the computer. Now you have your accounting real-time!
3.) Pay your bills through bill pay or use Bill.com.
Bill payment services offered by many banks are a winner every time. The day of the paper check printed or typed from your computer has gone away with the dinosaur. Time, paper, and ink are some of the resources that are wasted when resorting to these old ideas of accounting. Bill.com is a new up and coming resource used by accountants and outsourced CPA/CFO’s. This new technology allows the invoice to be loaded and saved with the payment in the cloud. It provides an audit trail and integrates into QuickBooks and Xero.com. This is a great tool for online data storage and less paper.
4.) Online data storage is the new filing cabinet.
Paper is so 80’s. A simple accounting system does not include shuffling paper around. Many business owners are going completely paperless and the tools available are too numerous to mention. Every industry has its restrictions and requirements so check that before you throw it all out. Bottom-line paper storage will cost you time and money. Start paperless and you will have saved yourself the headache from the beginning.
Simplifying your accounting does not have to be a complex and time consuming errand. It just takes thought and the ability to be a little forward thinking. Designing your chart of accounts to be simple, finding the right software, and using the available technology are all ways to make your business life simpler while also getting the appropriate information you must have to run a successful business. Just begin with the end in mind and be willing to switch gears as you and your business change.
Gabrielle Luoma, CPA CGMA has been providing simple accounting and tax solutions to business owners for over a decade. She is passionate about all things business and leadership and spends a lot of time reading, researching, and thinking about how to provide the most value to her customers. She was just recently cited by Accounting Today as a Top 10 Tweeter to Follow @GabrielleLuoma and is a trailblazer in the Accounting profession. Gabrielle, is a wife and mother, and maintains a full-life in her community in Tucson, Arizona.
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Category: Startup Advice