Business Bookkeeping Best Practices

I always love sharing great ideas, smart tips, and best practices that you should use for your business’ bookkeeping. Recently I came across this great blog called “Top 10 Do’s and Don’ts For Your Business Bookkeeping Practices“ at MyArizonaAccountant.com. You should read that blog but I’ve listed some of my favorites (plus my own thoughts) below…

They wrote: “1. Even if you hire a professional to do your books, you should have a basic understanding of bookkeeping. If only to keep costs down you should know how to track your monthly income and expenses.”

My thoughts: Yes! Yes! Yes! This is a great tip and it’s something we hope to contribute with our blogs here at IAC-EZ. Knowing this stuff isn’t important just because it’s nice to know… the very survival (and success!) of your business depends on it. This ties in to another tip they wrote: “4. In the beginning, you may want to do your own weekly bookkeeping to help keep costs down and so you have an understanding of where your money is going.” Although reading a book or a blog is helpful, there is no education quite like rolling up your sleeves and doing it for a while!

They wrote: “6. Take the time to reconcile your bank account on a monthly basis” and “7. Maintain a cash flow spread sheet and update it at least weekly, using the bookkeeping software you’ve chosen.”

My thoughts: These are great tips not just because they help you see what’s going on, but also note the regularity of the timing. One of the secrets of successful bookkeeping is to stay on top of your books. By sticking strictly to a timetable, your bookkeeping won’t seem as daunting.

They wrote: “10. Set up separate business bank accounts and keep your business records apart from your personal records.”

My thoughts: This is so important. Even if your business structure is a sole proprietor where separate accounts aren’t mandatory, it is still an excellent idea. It’s easier at tax time; it’s easier during business planning; and if you (or your business) are ever audited, the separate accounts will keep things very clear.

Jessica Routier, IAC-EZ

The advantages of working with a cloud-based system

A lot of business services are moving to the cloud. That is, they are leaving the desktop and its hardware-dependent software and they are being placed on the web. IAC-EZ is one of many cloud-based business services that entrepreneurs can use. The question that we get from many business owners, particularly those businesses that have been around for a while, is: Why should we move into the cloud and pay a monthly fee when we have perfectly good software already paid for on our computer?

Here’s why we like cloud-based software…

• Scalability: If your business starts small, you may not have a lot of money to buy the expensive downloadable software you need to run on your computer. However, if your business grows, you’ll need to buy additional software again and again and transfer the data from the smaller software to the larger software as you grow.
• Affordability: While a single, higher price compared to a smaller, ongoing price might seem more attractive, that up-front cost might be difficult to manage and therefore unreasonable. However, a small amount each month for a robust set of services is very affordable.
• Synchronization: There is an emphasis among cloud-based programs to be able to talk to each other. This is enabled with APIs so developers can create code to bridge the gap between two pieces of software. This isn’t nearly as common or as easy to do in computer-based software.
• Flexibility: You are no longer tied to one computer in one location to access your data. You can run your business from your home, the coffee shop down the street, or from your car (just not while you’re driving, please!).

(To hear more about why accounting software is moving to the cloud, check out this podcast).

The time is coming very soon when businesses won’t require anything but an internet connection to run their business and all of their business processes will be available online. Will you be ready?

Jessica Routier, IAC-EZ

Are you the “MacGyver” of your business?

Who here remembers the cheesy 80’s show MacGyver? He could turn a bag of Doritos and an acorn into some kind of machine that would enable him to catch the bad guys without ruffling his feather 80’s hair. In a lot of movies and TV shows today, we don’t see a lot of resourcefulness by heroes and heroines; it’s a lot of CGI and punching or shooting. Makes for good action but lousy heroes.

Resourcefulness is a dying art and it’s one of my favorite things about being an entrepreneur. Bootstrapping a business into a success requires some money, a lot of hard work, and a ton of resourcefulness to make it happen.

Recently, I came across a really useful post on the blog “What Would Day Say?” by career columnist Anita Bruzzese (Read the post here).

Although she is writing to job seekers, her post applies equally well to entrepreneurs. She draws from her experience as a columnist and points out how “no” really means “find another way”. So, to take her information and “reinterpret it” for entrepreneurs like you, it might read:

If your prospects say “no” to the product you’re offering, find another way.
If your schedule says “no” to doing more with the time you have, find another way.
If your bank account says “no” to hiring an employee, find another way.
If the marketplace says “no” to your ideas about growing your business, find another way.

Running a business shouldn’t be easy. It’s not something we can solve merely by throwing more money at it. Running a business takes ingenuity, courage, creativity, and resourcefulness.

Are there obstacles in your business right now that could be solved with resourcefulness?

Jessica Routier, IAC-EZ

Budgets for growing businesses

I’ve been thinking a lot about budgeting and forecasting lately, especially now that we’re just past the year’s half-way point and especially now that the economy is starting to (slowly) come back to pre-recession levels.

One of the specific areas of budgeting I’ve been thinking about is the differences between budgeting at various stages of a business – from start-up to big business. I was really happy to find this series of posts by venture capitalist Fred Wilson.

The first post I wanted to bring to your attention from him is the difference between projections, budgets, and forecasts. In short, projections are long-term, multi-year “what could be” numbers; budgets are one year plans; and forecasts are intrayear estimations. Read Fred’s full article for more details.

Now, here’s the really hands-on part: Over a series of 3 posts, Fred writes the step-by-step way for small, medium, and large businesses to budget:

An early-stage company – with about 10 people – is his first example in the blog post “Budgeting in an Early Stage Start-Up Company“. In this post, he outlines what business owners at this stage need to think about, including people costs and building up some cash.

A growth company, according to Fred, in his article “Budgeting in a Growing Company“  has between 10 and 75 employees and is in a constant state of flux. It’s not a bad thing but you need to make some adjustments. One of the first adjustments is to start budgeting earlier in the year for the next year. Another adjustment is to take the sales managers’ budget and dial it back because it is usually optimistic. Fred rightly points out that companies of this size rarely hit their budgets because things are always changing.

In his article about “Budgeting in a Large Company“, Fred talks about the challenges of budgeting in a company over 150 employees. It’s similar in process to a growing company, he says, but far more involved. And another step companies can do at this size is start benchmarking their budget against others in the industry.

These blogs are a great read for any size of business looking to grow. Take the time and read them!

Jessica Routier, IAC-EZ