Accounting doesn’t have to be scary.
Sometimes people have really good ideas that lead to an entrepreneurial decision. Getting excited about design, marketing, and strategy are sexy but let’s not forget about the nuts and bolts of what can make a business thrive or dive: accounting. As a business owner, you need to know your bottom line and access it quickly in a pinch so you can better understand where your money is going. Most startups likely don’t have the money to pay for a bookkeeper at the onset. Don’t panic. There are solutions.
Quickbooks can be configured to eliminate the need for a bookkeeper and leave enough time to manage the business effectively with about 5 hours of work per month. Here are a few tricks you can use that will save you time and provide accurate results.
Throw out the past
Sometimes companies have years of business under their belt. Understand that past years will never be reconciled with greater accuracy than simply starting fresh with an Opening Balance equity account. Enter all current payables, receivables, fixed assets, inventory and bank balances offset to the Opening Balance equity account and march confidently into the future. Leave the past behind you or it will haunt your future.
Make a decision as to which type of Quickbooks will be best for the business (desktop, online, or cloud). Follow the prompts that Quickbooks has conveniently outlined at the launch of the program. It will help identify the industry and set up recommended asset, liability, and equity accounts. If you are a particularly selective person you can edit and change all of the accounts as nothing is permanent.
The key to making Quickbooks work effortlessly is mapping. The concept of mapping is to create a “Road Map” in Quickbooks using “Items” to book general sales and expenses. Most are aware of basic mapping for physical products to Inventory, Cost of Goods, and Sales accounts to ensure sales book correctly. Mapping expenses may be something new that will save you time and keep your books consistent. Mapping keeps the utility bill from reporting in rent for example. If you set mapping up correctly, anyone can do the accounting work without the added weeks of training.
Mapping expenses works by creating “Service Items” in your “Items” list by vendor name, to which you assign an expense account to. When mapping your bank account reconciliation or entering bills, anyone holding the bill can type the name of the vendor on the bill into the line item. Up pops your Service Item and it maps directly to the assigned account in the item. You can hand a stack of bills to a 10 year old child and feel comfortable the expenses will report correctly.
Schedule your bank accounts to Quickbooks
Mapping the checking and credit card accounts to Quickbooks is a simple process thanks to the prompts by Quickbooks. On screen prompts will help link bank accounts and credit card accounts to the Quickbooks company file. Once connected all bank transactions are pulled into the Quickbooks file automatically. This saves time and makes sure nothing is missed. If the mapping is set up correctly the bank transactions can be assigned to a Service Item at the time of reconciliation and rest assured, everything will be reported accurately.
Nearly all Point of Sale (POS) platforms from Shopify to Shopkeep integrate with Quickbooks. If the mapping is set up and the integration team helps to link the POS to Quickbooks, all sales and expenses are booked accurately.
Accurate accounting is only good as to the use of reporting. The biggest mistake most small business owners make is not configuring reports in Quickbooks to help make critical business decisions. Sales by Item reporting is particularly effective to track total profitability by item and can be customized in a number of ways. Businesses can customize reports to provide consistent information, identify trends, and measure month over month comparisons. Memorize the report and access it every week. Accurate reporting is the goal to strive for. Next time you are at happy hour and someone asks how things are going; you can respond confidently knowing exactly what the strengths and weaknesses of your business are.
These above tools help you take on a role of accountant to track your business’ finances, support your growth, and keep your business in tip top shape.