The Best Accounting Solution for Creative Entrepreneurs

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There’s something about starting your own business – or going into business for yourself – that nobody told you. You’re going to have to find a phenomenal accounting solution that you understand, and even enjoy using.

If you’re like most small business owners, you may not even be business minded! You may very well be a creative type, an artist, a free-spirited salesperson who just wants to sell organic cookies or free-range yoga classes or inspiring life coaching sessions. While you certainly want to make money, you certainly do not want to headache of dealing with it.

But how many startups can afford to hire a full time accountant? When you’re just getting started, you may not even be able to afford to hire someone to do your taxes (Two-hundred whole dollars? Are you serious?!)

We’ve been there. And you’re in luck. Thankfully, today it’s totally possible to find an accounting solution for your small business that is user-friendly, affordable, and keeps you focused on your business itself, instead of your business’s finances. But successful accounting requires more than just choosing some accounting software or signing up for a cloud-based application. The following steps will help you create lasting habits that will keep your finances – and your spirits – in good health.

1. Get in the Habit

A budget meeting? You?

While the thought of having a meeting about accounting stuff – even with yourself – may feel way too corporate to you, it’s an essential accounting solution for your business. Call it whatever you want, but having daily, weekly or monthly check-in sessions about your finances is essential to maintaining a budget and planning your future.

If “budget meeting” or “accounting session” scares the bejesus out of you, try these names on for size:

  • Monday Morning Money Madness
  • Rolling in Dough
  • Accounting for Abundance
  • It’s All About the Benjamins, Baby

During these sessions, check out your overall status. What are you spending, and where? What is your projected income for the next month? The next quarter? What are your estimated profits?

By getting real about where you are, you’ll be able to meet your goals and move forward into the abundant abyss.

2. Go Shopping!

It’s time to choose the software or application that will act as your personal accounting solution and personal assistant. Nowadays there are cloud-based apps that let you track your spending, analyze your income, and create budgets while you’re on the go. Many of them also offer digital receipt functions and cool graphs that give you an instant snapshot of your spending.

So no, you don’t necessarily have to use QuickBooks. Check out Wave Accounting and Shoeboxed if you’re always on the go.

3. Speak the Language

How are you going to evaluate your COA is you don’t even know what that is? Accounting is filled with weird lingo: chart of accounts, accrued expenses, accumulated depreciation…and while you may not necessarily need to memorize a dictionary of accounting teams, you do need to have a basic foundation of knowledge from which to work.

For a comprehensive list of accounting terms and their definitions, click here.

You can also check out a Small Business Development Center for help. SBDCs are run by the U.S. Small Business Administration, and offer small business owners help with everything from developing a business plan to – you guessed it – accounting.

4. Go for Coffee

Or a cocktail. Get a drink with a fellow self-employed rock star or small business owner. Find out what they use for an accounting solution, and which software or cloud-based services they’ve tried. Ask them what they wish they knew when they were first starting out. You could also ask

  • Do you have an accountant? How did you find them?
  • How did you decide whether to become a sole proprietor, an LLC or an independent contractor?
  • How often to you examine your finances, and what do you look for?
  • Which software or applications do you use, and what do you like about them?
  • What do I need to know about paying quarterly taxes?

By giving your accounting life some love, you’ll be able to focus on what really matters – designing the most eco-friendly dresses the world has ever seen. (Or saving the planet, one organic cookie at a time).

The Top 3 Tax Mistakes of Small Business Owners

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Small business owners are some of the busiest people on the face of the planet.  Between managing inventory, hiring employees, marketing and, of course, selling their products, it can be quite easy for them to overlook some critical practices when it comes to handling their taxes.

Here are the top three most common tax mistakes small business owners make and ways to help you avoid them.

1. Overlooking Tax Deductions

This might seem like an easy mistake to avoid but you would be surprised at how many small business owners actually miss out on valid tax deductions simply because they are not informed.  Virtually any cost a business incurs as a result of its effort to earn a profit is tax deductible.  As long as the purchases are “ordinary and necessary” for the continuation of your business, the IRS will most likely accept the deductions.  A comprehensive list of what can and cannot be deducted can be found on www.taxreceipts.com.

2. Neglecting Bookkeeping Until Tax Time

Even if you have an accountant who does a great job of helping your company prepare its taxes, this doesn’t mean you should completely forget about your finances.  All small businesses should have a system in place that routinely tracks and categorizes their income as well as their expenses in a way that makes sense.  Additionally, this system should be cross referenced with the company’s bank statement each month to ensure accuracy and transparency.  Expenses that aren’t categorized in a timely manner can lead to confusion and even have detrimental impacts on future management decisions.  Waiting until the last second to get your books in order won’t just increase your chances of filing late, but it will also hurt your business at its core since decisions will be made off of insufficient data.

3. Not Knowing the Law

Many small business owners like to believe that their accountants are perfect and know everything there is to know about tax laws in their states.  This is, of course, false.  Small business owners need to take it upon themselves to research exactly what is expected of them beyond simply paying federal, state and payroll taxes.  If your accountant makes a mistake, the penalty falls on you, not them.  These penalties can be quite severe and carry some substantial fines.  It is important to utilize all the various free online resources so you can know exactly what your company is responsible for paying.  Be sure to check out www.SBA.gov and www.irs.gov/Businesses for useful tips and tools about staying updated on tax laws.

Are you a small business owner who has learned the hard way about making tax mistakes?  Please drop us a line in the comments section with some tips of your own!

Can the Cloud Play Nice with an Old-School Accounting Solution?

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Moving a small business or personal accounting solution to a cloud-based platform doesn’t have to mean giving up the tried and true accounting tools that you know and love. And no, that doesn’t simply move using the online version of QuickBooks instead of using the old software version.

Many small business owners and entrepreneurs have made the move to cloud-based accounting, but are still choosing to use a more traditional accounting solution to supplement and support their web-based functionality. Freelancers are also combining a variety of cloud-based apps in order to fulfill all of their personal and business financial needs.

If you’re not quite ready to make the leap all the way into the Cloud, or if you’d like some recommendations for the best complementary cloud-based accounting products, consider a few of these matches made in organizational heaven:

Google Drive and Excel

Excel spreadsheets are one of the Seven Wonders of the accounting world and are, according to CEO Peter Minton of Minton Law Group, “still relevant” as an accounting solution.

If you’ve spent any time at all dabbling in Excel, you know that the formulas alone can make the person creating them feel like a rocket scientist, and the poor soul unfamiliar with the application feel like tearing their hair out. Excel is not necessarily intuitive or user-friendly, but it is incredibly powerful and accurate.

The spreadsheet available in Google Drive (formerly Google Docs) is able to perform most of the same functions as an Excel spreadsheet, with a few exceptions.

The Google Drive spreadsheet is great for:

• Real time collaborations with clients and co-workers
• Updating static data
• Analyzing small amounts of data

Excel is still best for:

• Utilizing the keyboard shortcuts that allow you to work quickly in the application
• Analyzing medium to large amounts of data
• Creating pivot tables

A marriage between Excel and Google Drive works best when spreadsheets with large amounts of data or complicated formulas are created in Excel, and then shared and edited with Google Drive.

Another great option for blending the best of both worlds is to use SkyDrive, a product from Microsoft that lets you easily share and edit the document. One drawback to SkyDrive is that live collaboration is not yet possible.

Where Shoeboxed fits in

The reason Shoeboxed plays so well with so many online accounting solutions is that it does all the annoying legwork for you. Shoeboxed accepts completely disorganized envelopes full of your most tangled, uncategorized receipts. Shoeboxed then takes that information, digitizes it, organizes it, and formats it for export to your favorite accounting solution program (for a full list, please see: www.shoeboxed.com/partners).

Cloud-based accounting solutions are the natural next step in the progression toward organization, since they allow you to analyze and make sense of the numbers that Shoeboxed extracts. Using Shoeboxed in tandem with an online account solution is like hiring your own personal accountant and therapist, and finding out that they’ve been meeting in secret to talk about your future.

Wave Accounting and Human Accounting

Wave Accounting is a particularly popular cloud-based platform that lets you send invoices, track spending, and keep tabs on your business and personal finances. This accounting solution is made for those of us who aren’t accountants, but at the same time is 100% “accountant approved.”

While Wave lets you enter and track multiple accounts, it is also engaging in double-entry accounting, which is what your real live accountant wants to see. The best part about all this is that you don’t even need to know what double-entry accounting is to get all the benefits.

Wave Accounting lets you do your part, and makes your professional accountant’s life much simpler in the process. This marriage combines the ease and convenience of a cloud-based application with the human expertise of your favorite number-cruncher. And while we all love a computer’s ability to get things done faster and more efficiently, sometimes there is no substitute for a real live person’s ability to read between the lines and catch that one (important) thing our MacBook missed.

To create your very own accounting solution made in heaven, try combining something old, something new, something borrowed…and something that doesn’t have an on/off button.

Which old-school software can you not live without?