What methodology can I use get a snapshot of my business finances?
Currently I have very little book-keeping processes - it all gets put into a spreadsheet at the end of the year, and I take it to my accountant who files my taxes and generates a couple of statements based on my expense sheet and bank statements.
Currently, only at the end of the year do I know how much money the company made, what taxes I owe, and how much money I paid myself. I'm finding this to be very stressful - not knowing how I'm doing at any given time.
Is there a method I can follow to keep up-to-date, and know at a glance how my company is doing? Would any software packages help with this? I'm good with excel so I dont mind typing it all in that way either, but I just need a process to be able to judge how I'm doing at any given point in time.
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Keeping a lot of cash in the bank is always a good way to reduce stress. – Chris W. Rea 14 years ago
4 Answers
I was in the same place as you at one point, and learning the basics of financial reporting was a huge help in moving the business forward. Overall, and no matter how you do it, your goal should be to produce the following reports at least once a month:
The best book I can recommend on the topic is Financial Intelligence. It's super casual/approachable and you'll learn a lot. Generating and understanding these reports should give you an accurate, up-to-date picture of your business financials.As for software - we use Quickbooks. I can't say I love it, but it certainly helps us stick to the best-practices of bookkeeping and accounting.
Try an online service like Xero or Freshbooks. Both will give you the reports which will let you know at a glace what state your company is in at any given time.
I'd definitely recommend following a disciplined approach if you're finding it stressful.
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I love the Freshbooks guys, and it's perfect for consultant billing, but not for startup books +1 anyway 'cause I like them. :-) – Jason 14 years ago
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They've got a great API too, so ideal for integrating with. I guess it depends on what type of startup. Admittedly I'm more of a consultant than anything too. – Davewasthere 14 years ago
I would recommend Quickbooks. 90% of all small businesses use it and if you want to have an accountant do your taxes, they all are Quickbooks savvy. They also have pretty good reports.
The trick with any accounting tool is to keep it up to date. Make it a point to enter in transactions at least ever week or it gets ugly quick.
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Agreed. QB is a terrible tool but it's the one everyone knows and every accountant wants. I love the guys at Freshbooks but it's good for consultant billing, not the ins and outs of a startup. – Jason 14 years ago
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It would be great if someone could come up with something better than QB. I will check out Freshbooks. Thanks for the pointer. – Jarie Bolander 14 years ago
You don't want or need something complicated at this stage; certainly not full blown accounting.
Check out what we're doing at Outright.com ; automated bookkeeping from the minds of business owners rather than accountants. We import expenses from credit cards, freshbooks, receipts, and even paypal, and categorize everything for taxes. You need transparency to business finances; the site calculates Estimated Taxes, reports 1099s due to contractors, automates your P&L, identifies best customers and greatest expenses.
Worth a try; it's free
