Small Business owners wear many different hats in their business which includes, accounting and bookkeeping. Here’s the thing, when it comes to your finances, you want to have a tight grip on what is going in and out of your business. Hiring a CPA or a Bookkeeper gives you an additional set of eyes that can be beneficial to you in many ways. While the cost of outsourcing this function may impact your income, setting aside the budget to do so will save you time and you will avoid any financial errors or penalties.
Click here to learn The Fundamentals of Budgeting and Money Management for Small Business Owners
Finding the time to manage your business finances can be quite challenging however here is a list of bookkeeping and accounting software to use. This list was compiled by businessnewsdaily.com
AccountEdge Pro — AccountEdge Pro does more than accounting. It features DIY or outsourced payroll services, so you can link accounting to payroll, pay your employees (including direct deposit), track time and prepare payroll taxes. Retailers will also enjoy its inventory management suite, which also integrates with popular e-commerce solutions. AccountEdge Pro is available on Mac, Windows, mobile and in the cloud. accountedge.com/pro
FreeAgent — Unlike many accounting software products that limit transactions unless you purchase a more expensive package, FreeAgent offers unlimited users, clients, invoices, expenses and other functions for one monthly price. It also has a project management feature to help you keep track of billable hours. FreeAgent is best for freelancers, consultants and other really small business. freeagent.com
*FreshBooks — A favorite among business owners, FreshBooks offers one of the most user-friendly cloud-based accounting software for non-accountants. It's also our top pick for the best accounting app for iOS and Android devices for offering a wide range of accounting tasks you can perform on the go.
GnuCash Free Accounting Software — Is your business powered by Linux? GnuCash is a free, Linux-based accounting software that has all the features small businesses need to manage their finances: income and expense tracking, double-entry accounting, financial reports and calculations, scheduled transactions and more. It can also track bank accounts, stocks, bonds and mutual funds. In addition to Linux, GnuCash is also available on Android devices. gnucash.org
Harvest — Harvest makes it easy to bill clients and get paid. It offers a simple, easy-to-use platform that lets you easily track time and turn billable hours into professional invoices. You can also log expenses, take snapshots and store receipts, generate reports and connect the app to Google Apps, Salesforce, Basecamp and more than 50 other business apps. getharvest.com
Hiveage — Need a customized accounting software for your freelance or other small business? Unlike your typical accounting platform, Hiveage lets you pick and choose which features to include in your plan, so you only pay for what you need, when you need it. The free plan offers unlimited clients and unlimited invoices, and additional features range anywhere from $1.95 to $4.95 per add-on. hiveage.com
Intacct — Are you a big-picture kind of business owner? Intacct is advanced, cloud-based accounting software that’s strictly about business finances and helping your business grow. It can generate a wide range of reports, so you can evaluate your business from any financial angle, including profit margins, losses, income, revenue segments — such as total revenue, revenue by product, revenue by business and revenue histories — and more. intacct.com
*Intuit QuickBooks Online— Our pick for the best accounting software, Intuit's QuickBooks Online works for all types of small businesses. It offers basic and advanced accounting features, whether you're just starting out, looking to expand or have been around for some time.
Intuit Quicken Home & Business — Another Intuit accounting product, Quicken lets you manage both your personal and business finances in one place. This is perfect for really small businesses and home-based entrepreneurs who don't need a full-blown accounting software designed for more established businesses. The downside, however, is that the software isn't cloud-based and is only available for Windows, though an iOS and Android app is available for viewing your data. quicken.com/personal-finance/home-business-2015
Kashoo — Kashoo's online accounting software can handle your invoices, expense tracking and double-entry bookkeeping on your computer, smartphone and tablet. It also offers collaboration features, so you can share your books with your bookkeeper, accountant, investors and business partners. kashoo.com
Less Accounting — Just as its name suggests, Less Accounting can help you spend less time managing your finances and more time running your business. It automates everything from data entry to billing, so you spend minutes instead of hours on your accounting. lessaccounting.com
Outright — Formerly GoDaddy Bookkeeping, Outright simplifies accounting by using bookkeeping data to help you prepare for tax time. It automatically categorizes sales and expenses, then uses it to prepare your Schedule C, calculate taxes owed and more. outright.com
Paychex Accounting Online — Part of the Paychex payroll service, Paychex Accounting is a cloud- and mobile-based system that's designed to make accounting easier for you and your accountant. The platform can handle invoices, expenses, reports and collaboration features to give your accountant, bookkeeper and other users access to your finances. paychex.com/accounting-online
Sage One —Sage One has two types of accounting plans: one for invoicing by itself, and another for full-service accounting. The full-service version offers credit card processing and integrates with everything from e-commerce to point-of-sale (POS), customer relationship management (CRM), inventory tracking, document management and more. sageone.com
Simple Invoices — If you're a solopreneur and all your accounting needs primarily consist of tracking sales and getting paid, Simple Invoices may be the solution for you. This Web app lets you create estimates, send professional invoices, accept payments, generate financial reports and more, absolutely free. simpleinvoices.org
*Wave Accounting— Don't want to pay for accounting software? Wave Accounting can help. This Web-based accounting platform offers the same features as paid accounting services, making it our top pick for the best free accounting software for small businesses with 10 employees or fewer.
WorkingPoint — WorkingPoint is an all-inclusive accounting software that has everything you need to manage all aspects of your finances: accounting, invoicing, financial reporting and tax reporting. It's available anytime, anywhere over the Web or via mobile app. workingpoint.com
*Xero — Xero is our top pick for the best accounting software for Mac. We like that Xero is affordable, is easy to use and offers a ton of features and integrates with a plethora of third-party business solutions you likely already use. Xero also offers 24-hour phone, email and live chat support, so there's always someone there to help you.
Yendo — If you have a lot of customers, multiple businesses and a dedicated sales team, Yendo is the accounting software for you. It's both an accounting and CRM software, letting you and your sales reps manage and cultivate relationships with customers, while linking all the data with your enterprise resource planning and accounting platform. yendo.com
*Zoho Books — Part of the Zoho Office Suite, Zoho Books is a full-featured accounting software with a small business-friendly price tag. Unlike other accounting software that requires more expensive monthly subscriptions for additional features, Zoho Books' comprehensive set of accounting tools is available for one low monthly price.
-Business News Daily
Hiring a Bookkeeper
A Bookkeeper typically handles your basic day to day accounting needs for example, monitoring and tracking and expenses, paying bills, pay roll, record keeping, scanning receipts, creating invoices, and calendaring. Having a book keeper on staff is a huge benefit to your company when it comes to tax season. They usually keep record of all of your expenses needed for your accountant. Most business owners will wait until tax season to get their finances in order which is time consuming and many entrepreneurs will sometimes miss tax deadlines due to not being prepared. You don’t have to do everything yourself.
When to hire a bookkeeper?
Hire a bookkeeper whenever you have the financial means to do so. Interview at least 3-5 bookkeepers. Depending on your business, you can hire a bookkeeper on a full time or part time basis. Part time roll (2 to 3 days a week), you can hire a bookkeeper quarterly, to help you stay on track with your finances or on a full time basis.
Hire a Bookkeeper with prior experience. Ask for referrals and references of their work. I know your cousin Sam is a “math whiz” however, running a business is a little more complex than Calculus not to mention you want someone who understands business expenses. Don’t cut corners in your business! Hire a professional.
Do you have to be certified to be a bookkeeper? No however, there are two entities that offer certification courses outside of a University and that is American Institute of Professional Bookkeepers or the National Bookkeepers Association
Job Skills and Requirements
Attention to Detail: Accuracy is key. Good bookkeepers pay attention and make sure that mistakes in the numbers are not made.
Math: Adding, subtracting, and basic arithmetic is crucial.
Computer Skills: Preparing and producing spreadsheets and using bookkeeping software will be necessary.
Confidentiality: You will know the inner workings of a company's financial documents. Your discretion is important.
When to hire a CPA?
Even if you’re on a tight budget, hire a CPA anyway! Not just anyone, choose someone who specializes in working with small businesses. Research your CPA thoroughly! Look for testimonies from customers and ask other business owners for referrals. Meet with your CPA BEFORE you start your business. Why? Because you want to ensure that you have all of your basis covered, also, you don’t want to wait until tax time to meet with your CPA. You can possibly avoid a lot of mistakes if you meet with your CPA in advance.
Ask your CPA the following questions:
What should I know about budgeting and money management?
What are my responsibilities for filing taxes?
How much am I required to pay in taxes on an average?
Do you have any helpful tips in the form of a handout for budgeting and money management?
What are some of the mistakes small business owners make and how can I avoid them?
If I’m looking to hire employees in the near future, what taxes am I required to pay?
How often should I meet with you?
Do you send your customers helpful tips on a weekly or monthly basis?
What if I need to file an extension?
Do you have any recommendations for Book Keeping Software?
Taxes are often paid quarterly. “A quarter refers to one-fourth of a year and is typically expressed as a “Q”. The four quarters that make up the year are January, February and March (Q1); April, May and June (Q2); July, August and September (Q3) and October, November and December (Q4).”-Investopedia definition. The 4th quarter of your business will help you to understand where your business is currently, and where it is headed into the following year.
Notate all Key Dates that pertain to your business, as they vary. *2017 January 15, April 15, June 15, September 15 and November
It is important to know the dates and to notate them. The penalties are pretty steep for not paying taxes, especially if you do not pay them on time. A 9% failure to comply penalty will be applied to your balance if you do not pay 90% of what you owe.
Consult with your accountant on these two critical aspects of your business as soon as possible:
Profit and Loss Statement
It is important to have a clear understanding of your finances. A profit and loss statement is a financial statement that summarizes your annual revenues, costs, and expenses incurred. To be more specific, the statement provides you with a financial picture of where your business stands as of today. Prior to preparing a Profit and Loss Statement, talk to your accountant about depreciation, profit, any rules, and whatever questions or concerns you may have. *Tip: Keep track of your receipts throughout the year for items such as meals, mileage, travel, and meetings, as this documentation is a valuable record of your work.
The 1099 statement is a year-end tax summary form. It’s typically used for self-employment, rents and royalties. If you have an accounting system, double check to see if there is a 1099 field. Check with your vendor if you aren’t sure where to find the option to create a 1099.
Hire your financial team, Bookkeeper and CPA early in your business. To avoid the major pit falls of accounting and finance, meet with your CPA as soon as possible. You don’t have to do everything yourself. Outsourcing key functions will help reduce mistakes and help you remain productive.