FAQ is a regular blog feature that answers frequently asked question and makes them available as a growing list of tagged blogs.
IAC-EZ is a bookkeeping system designed to be simple: What comes in, what goes out, what’s left over… and then to generate your needed reports from this information. That’s what the transactional-based system is all about.
This system means that you don’t need to think about debits and credits or double column entries. IAC-EZ was created to suit the needs of the billions of freelancers and independent contractors out there that track their bookkeeping with receipts based on – you guessed it – transactions.
By keeping track of your income and expenses for you, we can generate accurate profit and loss statements and estimate your taxes. All you need to do is input the transactions.
That’s what we do. There are things that a transactional-based system doesn’t do. We don’t track equity, asset, and liability accounts as a double entry accounting system would. (Note: You can keep track of outgoing and incoming entries, but we don’t keep running totals or generate balance sheets that include the value of your assets because they are not based on transactions… makes sense, doesn’t it?).
This is important to freelancers and entrepreneurs because you are a transaction-heavy group of people; many of you do not have a lot of business-related assets that need to be valued or depreciated. (You might have some – like your computer or car – but not as many as, say, a large manufacturing company).
That means that you focus on the transactions and not the accounts. For example, you would not enter the payment to your credit card, rather you would enter all of the transactions on your credit card.
If you do want to keep track of your equity, asset and liability accounts and still use IAC-EZ, here’s what you should do:
1. Use a standard spreadsheet to track equity balances.
2. Create equity, asset or liability accounts, titled to fit your need, as “other expense” or “other income”, thereby maintaining a correct “net income” (while still being able to keep running totals of owner contributions and the like).
Transactional-based systems are the right systems for most entrepreneurs and that’s why we created IAC-EZ to operate as a transactional-based system.
Do you have a Question? Please email it to support@iacez.com.
Earlier this month I promised to blog about this. In my previous blog I mentioned that competing with other businesses for customers was hard work and in order to differentiate their business, business owners might offer the lowest price or they might offer new and innovative products and services.
Now, I realize that not all industries or businesses have a choice in the matter, but if you have any say in the pricing of your products, let me encourage you to avoid selling as “the lowest priced”.
When you make the lowest price your main selling point, you end up getting customers who only care about price. And to be frank, customers who only care about price are the most fickle kind of customers you can have. As soon as a lower-priced provider comes along, they will leave you and switch. And if you think that no one can possibly offer a price that is lower than you, just wait about 6 months. It will happen. It’s a given, like death and taxes.
Not only that, but your profit margin (obviously) will be at risk. You’ll be earning pennies against your competitor’s dollars. You might win more clients but you’ll be working harder for less. Your higher priced competitors are serving fewer customers, working less, spending more time with each customer, and earning the same profit. That’s not a good equation for you.
Instead, offer creative and innovative products and services. Instead, offer amazing service. Instead, offer crazy convenience and ease-of-use.
Now, having said all that, let me say this: I’m not suggesting that you should stick it to your customers and charge as high a price as possible. Nor am I suggesting that having a lower price isn’t a good thing. What I am saying is that you need to take the focus off of the dollar sign and put it on the value equation. If you charge the lowest price, great. Just make sure you get enough profit and make sure that the client is appreciating your business for the value you provide and not for the money they’re saving.
Clients who buy for value – which is the majority of clients (excluding, of course, the few that only buy for price) – are far better clients to win and keep. Yes, you might have slightly fewer clients than the lowest-price provider, but I promise you: your clients will be more loyal, you will work less, and your profits will be as high or higher than that low cost competitor’s.
Until next time,
Jessica Routier, IAC-EZ
FAQ is a regular blog feature that answers frequently asked questions and makes them available as a growing list of tagged blogs.
We support every country, the only difference or exception is that tax estimates are currently just US based.
Do you have a Question? Please email it to support@iacez.com.
Mr. Networth is the wizard behind IAC-EZ. He works hard to take your business data and turn it into useful information to help your business keep records, stay compliant, and grow! You can read more about him here.
From time to time, Mr. Networth likes to take a moment to step away from his work to talk with us. We’ve transcribed a brief interview with Mr. Networth here:
IAC-EZ: Hello Mr. Networth! Thank you for taking time from your busy schedule to speak to us.
Mr. Networth: My pleasure. I don’t have much time to talk, there’s plenty of work to do!
IAC-EZ: Mr. Networth, in this interview, we’d like to talk about your years as a youngster. How old are you now?
Mr. Networth: My youthful appearance belies my age. I’m really quite old. But it’s difficult to tell because the beard turned white early. A wizard never says how old they are but I’ll give you a hint: If you’re only as old as you feel, I feel as young as a 639 year old! I’m still spry!
IAC-EZ: So tell us about your childhood.
Mr. Networth: I grew up in a wizard school for budding mathematical geniuses. Forget Hogwarts! We learned math on an abacus and we kept ledgers with quills dipped in ink. Every day, we’d get up before the sun and make our own inks out a secret recipe. Actually, we used two inks – black and red, of course! Courses included balancing books, doing complex calculations in the blink of an eye, counting as high as you possibly can, and understanding the various accounting and bookkeeping terms. I once spent an entire semester studying direct and indirect costs. Very fascinating stuff!
IAC-EZ: Let’s not bore our readers. Why don’t you tell us what you would do in your spare time.
Mr. Networth: My friends and I would get together and write out complex calculations and then the other person would have to spin around and around until they were dizzy before trying to solve it.
IAC-EZ: And your summer vacations?
Mr. Networth: My parents were both busy with their own financial wizardry and I’d help them out. And on the weekends, we’d all go the beach for a picnic and to estimate the grains of sand.
IAC-EZ: Sounds like a life that only a mathematical wizard like yourself would enjoy. Our time is up for today, we’ll look forward to hearing from you again soon!
Jessica Routier, IAC-EZ
