Setting up Your Accounting System w/o Accounting Software
The set up of your business accounting system does not have to be as hard as it may seem. There really is more leeway here than most think. Although an automated accounting system does make life easier for a lot of business owners, there are some who can’t afford hundreds of dollars on software, don’t have the time to learn that software, or those who don’t know (or care to know) the detailed difference between a debit and a credit. Rest assured there are other options available to you.
You can easily set up an Excel spreadsheet that keeps track of the basics you need. Something as simple as the date, expense or income amount, and description of the payment or receipt will suffice. You can re-create this sheet for each month of the year. You can either put the information into your spreadsheet via the computer or by hand, whatever works best for you. Just be sure that you are including ONLY BUSINESS related items on this sheet. You’ll be glad you did when it comes time to do your taxes. There are some people who don’t even want to fool with the computer if they can keep from it and there are systems that will work for them as well.
One way, is to get a small file organizer and file folders. If you spend a lot of time in your vehicle you can put it there and just put receipts, deposit slips, etc. in the organizer as you receive them. There are a few options on how to organize this. I have found organizing it by month is the best way, especially if you have an accountant or bookkeeper who does all the work for you. You could even go further by separating each month into expense and income folders. This will help the process stay more organized and save you time, because now you can enter your transactions in a ledger or your computer once a month instead of daily or weekly.
Some people have found that a notebook/checkbook will work for them just as well. I would not recommend either of these if you have a lot of transactions (payments, receipts), but for someone just starting out this would be another way to keep everything together in the beginning. You must be diligent about recording in either one of these items. If using a notebook or checkbook, I would suggest daily recording of items because if you are not extremely diligent with your recording this way, you will inevitably have an important transaction slip through the cracks.
No matter which method you use: Keep your receipts, etc. in a file cabinet or a small organizer like the one mentioned above so you will always have supporting documents. There are various ways that you can create an accounting system that works for you. That’s the key, finding something that works for you, doesn’t take up so much time that you are not able to concentrate on the business itself and is accurate. As long as you stay organized and on top of things, you’ll find that your system can help you instead of hurting you. Wouldn’t you rather have all your records right there together when you need that loan or at tax time, instead of hunting your desk, car floorboards, day planner, filing cabinets, and kitchen table for hours on end and still missing that one important write off? I know I would.
You can easily set up an Excel spreadsheet that keeps track of the basics you need. Something as simple as the date, expense or income amount, and description of the payment or receipt will suffice. You can re-create this sheet for each month of the year. You can either put the information into your spreadsheet via the computer or by hand, whatever works best for you. Just be sure that you are including ONLY BUSINESS related items on this sheet. You’ll be glad you did when it comes time to do your taxes. There are some people who don’t even want to fool with the computer if they can keep from it and there are systems that will work for them as well.
One way, is to get a small file organizer and file folders. If you spend a lot of time in your vehicle you can put it there and just put receipts, deposit slips, etc. in the organizer as you receive them. There are a few options on how to organize this. I have found organizing it by month is the best way, especially if you have an accountant or bookkeeper who does all the work for you. You could even go further by separating each month into expense and income folders. This will help the process stay more organized and save you time, because now you can enter your transactions in a ledger or your computer once a month instead of daily or weekly.
Some people have found that a notebook/checkbook will work for them just as well. I would not recommend either of these if you have a lot of transactions (payments, receipts), but for someone just starting out this would be another way to keep everything together in the beginning. You must be diligent about recording in either one of these items. If using a notebook or checkbook, I would suggest daily recording of items because if you are not extremely diligent with your recording this way, you will inevitably have an important transaction slip through the cracks.
No matter which method you use: Keep your receipts, etc. in a file cabinet or a small organizer like the one mentioned above so you will always have supporting documents. There are various ways that you can create an accounting system that works for you. That’s the key, finding something that works for you, doesn’t take up so much time that you are not able to concentrate on the business itself and is accurate. As long as you stay organized and on top of things, you’ll find that your system can help you instead of hurting you. Wouldn’t you rather have all your records right there together when you need that loan or at tax time, instead of hunting your desk, car floorboards, day planner, filing cabinets, and kitchen table for hours on end and still missing that one important write off? I know I would.
posted by Mama Arika at 3:41 PM
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