According to Score1, 78% of startups rely on personal funding to launch businesses. That means aspiring entrepreneurs are using their own personal money to get started. As such most of them are bootstrapping and are looking to cut corners in every way possible.
One service that usually gets put on the back burner is hiring a bookkeeper to keep up with the business finances. Most entrepreneurs know that tracking every dollar that comes in and goes out is important and could save them a lot of money at tax time but too many of them see hiring an experienced professional to help them with this as optional. Or they just don’t see how they can afford to hire someone on a very limited budget.
So, that means they are left with no choice but to tackle the bookkeeping for themselves. Unless you have some background in accounting, keeping up with all of the moving parts that comprise “the books”(revenues, expenses, assets, liabilities) can be daunting and a downright headache.
But if you think you must, here are the 3 things you must do to be successful:
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- KISS. Keep your bookkeeping process simple. If you’re just starting out and only have 10 to 20 transactions a month, there is no need to create an elaborate bookkeeping process. Since you more than likely don’t want to do your own bookkeeping in the first place, don’t put up obstacles that will encourage you to procrastinate. Technology is your friend. Use online accounting software like QuickBooks Online, Freshbooks or Xero. Excel is fine to use starting out but you will still have to do a lot of manual data entry to keep records up to date. Using accounting software can make doing monthly bookkeeping less painful since most of them have the ability to connect various business accounts (bank, PayPal, credit cards), which will feed 99% of the businesses activity directly into the software. No manual entry needed.
- Commit. You have to commit to the job. It doesn’t matter what software you choose, it won’t help you if you don’t use it. Not to mention it’s a waste of money. If you’re going, to do the bookkeeping for your business, you must set aside a dedicated time weekly, bi-weekly or monthly to make sure it’s done. Think of this time just like you do other things that you value: time to workout, for self-care or for meditation. Set the time and don’t let anything interfere with it. While, this may seem like an extreme thing to do, it will be worth it when your books are up to date and you have reliable, accurate reports with timely information for decision making.
- Educate. You don’t need an accounting degree to do the bookkeeping but some basic accounting knowledge will definitely make the task easier. There is nothing more frustrating than spinning your wheels for hours because you couldn’t figure out how a non-routine expense should be classified or how to categorize a refund to a customer. So you might want to pick up a few resources like one of the books listed here: https://www.investopedia.com/best-accounting-books-5179543
The bottom line is that sometimes entrepreneurs have to take on unwanted tasks in the beginning due to budget constraints. Even though doing the books may not be your favorite thing to do that doesn’t mean it has to be a complete burden or done poorly. Keep the process simple, make up your mind to commit to the job and equip yourself with sufficient knowledge. These steps should put you on the right track. Happy Bookkeeping!
[1] https://www.score.org/resource/megaphone-main-street-startups