Business Basics Tip #5 – Set Up Your Bookkeeping Software


Bookkeeping is usually everyone’s least favorite part about running a business. But it’s one of the most important systems to have in place. Why? Because if you aren’t keeping track of your income and expenses, you don’t know how your business is doing.

Bookkeeping serves two major purposes:

1.    Reporting financial information to the IRS

2.    Tracking your income and expenses so you can make important decisions about your business.

The IRS requirements are going to depend on your specific business. Again, I strongly recommend hiring a tax professional to help you with this process rather than trying to figure it out yourself. But it’s also important to keep in mind that while your CPA will answer questions and file your taxes for you, YOU are responsible for providing the appropriate information. If you show up for your appointment with a box of disorganized invoices and receipts, it’s going to cost you. But, if you are organized through the year and give them up-to-date P&L reports and balance sheets, it should be pretty painless.

What I’m going to focus on here is the part that you should do yourself, which is a huge step towards being a responsible and productive business owner. My number one piece of advice is to incorporate bookkeeping software into your life. These programs are designed to keep your business financially organized, which makes your life easier.

What does it do?

Different plans come with different options, but these are the basics:

Track Income

  • Create and send invoices to your clients

  •  Record deposits/mark invoices as paid

  • (optional) receive ACH (free) & Credit Card payments (for a fee)

  •  Easily see who owes you, how much, and which invoices are past due

  • Run reports to see how much you’ve made, for which services, etc. for any given time period

Track Expenses

  • Automatically download transactions from your bank and credit card accounts

  • Categorize expenses for proper accounting

  •  Record (and print if you choose) checks

  •  Attach receipts

  • Run reports to see how much you’ve spent, for which categories, etc. for any given time period

Tax Reporting

  • Profit & Loss

  • Balance Sheet

  • Invite your accountant to access your bookkeeping online – they can see what you’ve done and make adjustments if needed

But I don’t know anything about accounting.

The great thing is that you don’t have to be an expert to use it. It never hurts to educate yourself about the principles of accounting and how certain functions work, but luckily any bit of information you might need is available online. Not sure how to categorize an expense? Need to know how to split a payment between different services? Did you accidentally show a deposit in the wrong account? Google it to find a tutorial, help forum, or online article to help. If you’re still not sure, keep a list of questions to ask your CPA. 

What should I use?

There are a number of programs out there, and it ultimately comes down to your personal preference with regards to price and function. The two most popular ones in my experience (all but one of my clients use one of these) are Quickbooks and Freshbooks*. Both are user-friendly, offer different subscription plans depending on your needs and are cloud-based so you can access your information from anywhere.

Disclaimer: I am a Freshbooks affiliate, so I do get a small referral fee (which I appreciate) for anyone who signs up using my link. I recommend trying both (for free) to see which makes most sense for you.

I don’t want to pay a monthly fee*.

There are desktop programs you can buy, but the online versions are updated more regularly and can be accessed from anywhere (by you, your accountant, or any other admin on your team to whom you give permission). Sure, you can create invoices in your word processing program, write checks the old-fashioned way, and keep an Excel sheet with all of your expenses for the year. But, you will be much more efficient when your financial details are all in one place. It’s too easy to make mistakes when you are trying to juggle multiple programs that don’t work together.For me, the reporting function alone is worth the cost, because that’s where I get the detailed information I need to make important decisions about my business. The time it saves me is worth much more than the cost of the subscription.

*Subscription fees for bookkeeping software are deductible as business expenses.

So what do I do?

1.    Sign up for a 30-day free trial or subscribe to the plan you want:

2.    Set up your company information

3.    Link your bank/credit card accounts and import transactions (If you’re starting in the middle of the year, you may need to manually enter some of the earlier transactions. It’s best to have everything from at least January 1stof the current year so your reports are accurate.)

4.    Customize your invoices

5.    Set up your products and/or services

6.    Use it for all of your business transactions and realize how much it simplifies your life and, dare I say, makes bookkeeping seem far less intimidating.

I know it still seems like all this bookkeeping stuff is a lot of work, and maybe more than you even want to think about. But it really is a necessary and vital part of any business. So why not take advantage of these user-friendly programs designed to make it easier for you? If you’re just getting started, it’s the perfect time to put a good system in place. It’s so much better to get your books in order now when you can learn as you go, rather than trying to do it later when you’re too busy to figure it out. But even if you’ve been in business for a while, it’s never too late to get an organized and efficient bookkeeping system. It may seem daunting at first, but it will be worth it. 100% of my business clients use bookkeeping software. There’s a reason it’s so popular, so give it a chance!

That’s it for my Intro to Business Basics Series. I hope this information has been useful for you. If you are getting your business started and need guidance, or if you need help with your existing business, please send me a message. I offer a variety of options (from hourly consultations to long-term coaching packages) so you can get focused assistance for your specific needs and become a more confident and productive business owner!