Automating bookkeeping tasks saves time, $$.
It is not surprising that many business owners find bookkeeping challenging, and many are. Having accurate financial records helps managers and business owners answer important questions. Is the business making money or losing it? How much? Is the business on sound financial ground or are troubling trends in cash flow pointing to an instability of some kind? A sound bookkeeping system is the foundation for gathering the information necessary to answer these questions.
As a business owner it's important to focus as much of your time as possible on the work you have or getting the work you need. And that means minimizing administrative tasks. Take bookkeeping, for example. Bookkeeping is critical for maximizing tax deductions and monitoring the overall health of your business, but it's a royal pain. But you can take steps to automate bookkeeping tasks so you can stay focused on existing jobs, while marketing your talents and enjoying your summer.
Many people still hand-write their income and expenses in a notebook or Excel spreadsheet and then type up invoices in Word or a similar program. This can work just fine if you don't work a lot of jobs. If, however, you find yourself with multiple clients, invoices and expense reports, you will spend more and more of your time trying to keep everything together. A dedicated, automated bookkeeping system and/or bookkeeper is a necessity at this point.
For years Quickbooks has been the lord and master of small business accounting software. Intuit has improved Quickbooks Online version so that the banking software links business transactions to payments and invoices. This gives small business owners real control over their cash flow.
By using QuickBooks Online, banking transactions are automatically linked to the company you've set up in the software. Banking online takes the guesswork out of reconciliation; data is automatically downloaded directly into Quick Books Online, so you can avoid the errors that occur frequently when entering data manually.
Quickbooks desktop version also allows you to download banking transactions either automatically or manually. However in this version you need to pay for the automated download.
Two years ago I checked out Freshbooks. I wanted to integrate time tracking, estimates, richer reporting and some other features into my setup. A few clients were using Freshbooks so I decided to give it a try. However, I still needed a simple online cash accounting system. That's when I found Outright.com. While Freshbooks includes expense reporting, it's a little more involved than Outright. Outright integrates seamlessly with Freshbooks and has beautiful reporting features. I can run a profit/loss statement at the press of a button. I can run monthly, quarterly and annual reports just as fast.
Tricia McCullough owns Augustedge, an accounting and financial services firm in Wenatchee. She is a member of the Washington Society of Certified Public Accountants, American Institute of CPAs and IMA. She also serves as a SCORE volunteer in Wenatchee and on the business advisory council of the North Central Home Builders Association. She can be reached at 509-494-8500 or firstname.lastname@example.org.
Automation reduces dependency on trained and skilled manpower. Over time, automation can also impact a company's bottom line. Following are five mistakes that can be avoided with the judicious use of automation.
1. Not tracking expenses diligently
It is easy to forget about recording an expense once a transaction is complete. Automation can help resolve this by ensuring all expenses are tracked. This strategy also applies to reimbursements, especially when small business owners may be covering expenses from their own funds without applying for reimbursements from the company.
2. Delaying account reconciliation
Account reconciliation is a critical step in the bookkeeping process. For business owners performing this function themselves, it is often relegated as a task to complete later. However, this opens the door for small errors to snowball into larger accounting mistakes. Automation can reconcile business books with bank and card accounts on a regular basis, thus highlighting discrepancies that may arise.
3. Tracking small 'incidental' purchases
Oftentimes, expenses which are smaller than those stipulated by the IRS guidelines remain unrecorded by business owners. However, these small expenses accumulate and could be beneficial to track for tax purposes. Even small expenses add up to help you qualify for effective tax deductions.
4. Creating wrong categories
Bookkeeping is all about creating categories and ensuring the right figures are assigned to the right categories. Automated solutions can help by creating the correct categories and ensuring these are updated accurately. Updating the wrong category can result in larger issues at fiscal year-end.
5. Ensuring back up
Automation helps create updated reports and, more importantly, accounts that are tracked and contain recorded data. As opposed to manual bookkeeping, automation can generate reliable trails and ensure accurate financial data.
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|Title Annotation:||KEEPING THE EDGE|
|Publication:||Wenatchee Business Journal|
|Date:||Jul 1, 2013|
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