Best independent Business practices - Quickbooks and more
April 20, 2015 11:26 AM Subscribe
I'm a business of one person (an LLC).
I'm doing things much sloppier than I can/should - help me automate it and make it smooth! Need advice on best practices and ideal services.
So, this year was by far my best year. I'm an independent; I do all the work, all the billing. I don't sell merchandise - I am the product.
Where I'm dumb: I'm not really keeping the smartest track of expenses. Keeping a list of open invoices is a pain. I'm not generating the invoices as fast as I should.
I'm using a free service (http://waveapps.com/) which is like Quickbooks (or Freshbooks) - but I want to get my house in order. I feel the free tool must be a pale imitation of the real ones.
I have a good accountant. They do great work. My wife and I file a joint return.
My accountant is part of a bigger firm - that has 'large' services for larger clients...small services for individuals - but I'm in between; they don't have something ideal for me, the small LLC. They have a very expensive service that is way about my needs.
Look, all I'm looking for is something that I can mostly automate and speed these process. Where I can get paid from a client and the deposit automatically reconciles. When I have expenses, that they are automatically fed into the accounting.
What I think I need:
Something that makes invoicing easy. That ties directly with my business bank account and business credit card. Something that will recognize and reconcile incoming money (based on amounts and client name.) It'd be great if it'd categorize and assign expenses to a given client and the appropriate accounting category
I think Quickbooks or Freshbooks does some of this.
I think Shoebox does some of this.
I'm not looking to reinvent the wheel. I'm looking for someone who has been through this can help help me adopt the best practices in a day - not figure it out myself.
I'm looking for a best practices document along with the right online services to make this as simple and smooth as possible.
Yes, I'd pay someone to mentor me through this; and I don't think it's my accountant...I feel that this is one hour of help at my level...am I wrong? I've been doing this for four years and while I've figured out quite a bit...taxes this year were both painful in timing and financially.
So, this year was by far my best year. I'm an independent; I do all the work, all the billing. I don't sell merchandise - I am the product.
Where I'm dumb: I'm not really keeping the smartest track of expenses. Keeping a list of open invoices is a pain. I'm not generating the invoices as fast as I should.
I'm using a free service (http://waveapps.com/) which is like Quickbooks (or Freshbooks) - but I want to get my house in order. I feel the free tool must be a pale imitation of the real ones.
I have a good accountant. They do great work. My wife and I file a joint return.
My accountant is part of a bigger firm - that has 'large' services for larger clients...small services for individuals - but I'm in between; they don't have something ideal for me, the small LLC. They have a very expensive service that is way about my needs.
Look, all I'm looking for is something that I can mostly automate and speed these process. Where I can get paid from a client and the deposit automatically reconciles. When I have expenses, that they are automatically fed into the accounting.
What I think I need:
Something that makes invoicing easy. That ties directly with my business bank account and business credit card. Something that will recognize and reconcile incoming money (based on amounts and client name.) It'd be great if it'd categorize and assign expenses to a given client and the appropriate accounting category
I think Quickbooks or Freshbooks does some of this.
I think Shoebox does some of this.
I'm not looking to reinvent the wheel. I'm looking for someone who has been through this can help help me adopt the best practices in a day - not figure it out myself.
I'm looking for a best practices document along with the right online services to make this as simple and smooth as possible.
Yes, I'd pay someone to mentor me through this; and I don't think it's my accountant...I feel that this is one hour of help at my level...am I wrong? I've been doing this for four years and while I've figured out quite a bit...taxes this year were both painful in timing and financially.
There are definitely products you can use to ease some of this, but you can't make it just happen. Either you have to pay someone to make it happen, or you have to spend the time and effort on it yourself. Nothing can replace that. People dismiss the importance of this all the time--but small businesses also fail all the time. Managing your business finances is as much a part of your job now as the service you provide. People can make recommendations about good software and services, but everything you've said here suggests that you're not taking that side of things very seriously. Start by taking it seriously. Make the process efficient second.
Like, this is a very broad estimate without knowing the nature of your business, but if you aren't spending half an hour a day on this yet, you don't have a process that takes too much time, you have a disinclination to actually do it. I suspect you could probably enter all your expenses daily, do invoicing and bill-paying at least weekly, and reconcile all your accounts every month on less than half an hour a day. You could hire someone to do that, but you'd spend time interfacing with your service provide and you'd still have to personally be on top of everything in order to supervise their work. This is like asking how you get fit without spending time on exercise--you can exercise more efficiently, maybe, but you still have to actually go do it every day. It's not something you accomplish in one hour, once. You're not on top of it, and you can't automate being on top of it. Automate the drudgery once you know which parts are actual drudgery and which parts are you avoiding managing your own company. Because you are a company, now, and you need to act like it.
posted by Sequence at 3:02 PM on April 20, 2015 [1 favorite]
Like, this is a very broad estimate without knowing the nature of your business, but if you aren't spending half an hour a day on this yet, you don't have a process that takes too much time, you have a disinclination to actually do it. I suspect you could probably enter all your expenses daily, do invoicing and bill-paying at least weekly, and reconcile all your accounts every month on less than half an hour a day. You could hire someone to do that, but you'd spend time interfacing with your service provide and you'd still have to personally be on top of everything in order to supervise their work. This is like asking how you get fit without spending time on exercise--you can exercise more efficiently, maybe, but you still have to actually go do it every day. It's not something you accomplish in one hour, once. You're not on top of it, and you can't automate being on top of it. Automate the drudgery once you know which parts are actual drudgery and which parts are you avoiding managing your own company. Because you are a company, now, and you need to act like it.
posted by Sequence at 3:02 PM on April 20, 2015 [1 favorite]
What's your hourly rate (or gross billing monthly)? If you bill more than $100 an hour or have gross receipts over $7-9K a month, find a bookkeeper (ideally someone who comes to you probably once a month and then remotely in the interim). If you are asking these questions at this stage, it's probably not worth sorting out if you can get good at it.
I've run small and medium sized businesses and have been on my own for about a decade. I use Quicken (not Quickbooks) and FreshBooks. I do not copy data from one to the other (I minimize my data entry that is required, have a small client list that I bill in pretty big chunks). I started out running small businesses so this is second nature to me. I spend about 20 minutes a day tracking time and review general business (time earned, projections, expense management) stuff. Billing takes about an hour a month. I like this stuff, so it makes a lot of sense for me to do it and it enables me to make decisions on the fly about both new work and ongoing engagements (do I ask for a change order? How big? Is it worth it over the long term?) and that feeds directly into my personal financial planning.
But if you bill $100 an hour and spend an hour a day on something that you don't like and it doesn't give you meaningful business intelligence (even as a solo operator your should be doing basic metrics to determine some sense of P&L on a client by client basis) then outsource it. Not worth the time.
If you bill $40 an hour, I'd advise taking a bookkeeping class at a community college. Because it's better you understand the process and then decide about which tools work best for you.
The upside to finding a bookkeeper (ideally who works with other clients in a similar industry) is you get some insight into which practices make sense. Are there activities you aren't billing for but could? Are you trying to recover expenses as a client billable that aren't worth the effort (that's a mixture of opportunity cost and client satisfaction -- if you are premium vendor, billing for cab fare can seem a little miserly to me, regardless of what attorneys say)? Are you doing rate increases frequently enough? Etc.
Don't expect to solve this in a hour at your bill rate. Figure a day. You need to explain to someone who knows how to do this what your current set up is, all the details of your business (types of clients, billing, payment methods, how you track expenses, how your accountant wants the data), short and long terms planning and (possibly) some education for you on how to set this up. If you thing your income is going to be stable to increasing over the next 3-5 years, you will recover this spend in 18 months, easy (based on how you've described your business).
posted by 99_ at 5:48 PM on April 20, 2015
I've run small and medium sized businesses and have been on my own for about a decade. I use Quicken (not Quickbooks) and FreshBooks. I do not copy data from one to the other (I minimize my data entry that is required, have a small client list that I bill in pretty big chunks). I started out running small businesses so this is second nature to me. I spend about 20 minutes a day tracking time and review general business (time earned, projections, expense management) stuff. Billing takes about an hour a month. I like this stuff, so it makes a lot of sense for me to do it and it enables me to make decisions on the fly about both new work and ongoing engagements (do I ask for a change order? How big? Is it worth it over the long term?) and that feeds directly into my personal financial planning.
But if you bill $100 an hour and spend an hour a day on something that you don't like and it doesn't give you meaningful business intelligence (even as a solo operator your should be doing basic metrics to determine some sense of P&L on a client by client basis) then outsource it. Not worth the time.
If you bill $40 an hour, I'd advise taking a bookkeeping class at a community college. Because it's better you understand the process and then decide about which tools work best for you.
The upside to finding a bookkeeper (ideally who works with other clients in a similar industry) is you get some insight into which practices make sense. Are there activities you aren't billing for but could? Are you trying to recover expenses as a client billable that aren't worth the effort (that's a mixture of opportunity cost and client satisfaction -- if you are premium vendor, billing for cab fare can seem a little miserly to me, regardless of what attorneys say)? Are you doing rate increases frequently enough? Etc.
Don't expect to solve this in a hour at your bill rate. Figure a day. You need to explain to someone who knows how to do this what your current set up is, all the details of your business (types of clients, billing, payment methods, how you track expenses, how your accountant wants the data), short and long terms planning and (possibly) some education for you on how to set this up. If you thing your income is going to be stable to increasing over the next 3-5 years, you will recover this spend in 18 months, easy (based on how you've described your business).
posted by 99_ at 5:48 PM on April 20, 2015
I agree with a lot of what 99_ says. This problem, unfortunately, doesn't have a one-size-fits-all solution. It requires a deep understanding of your processes and business circumstances to be able to choose the right off-the-shelf tools that you can make work together for you.
Many "traditional" accounting practices are largely unfamiliar with the vast majority of online financial tools and finance apps. They tend to shy away from cloud-based systems and tend to prefer classic, locally hosted systems that they can exercise complete control over (Quickbooks, Caseware). Your current tax accountant may fit into this category.
That being said, there are accountants out there who specialize in what you're looking for. I'd suggest looking for accountants who run their own businesses as online accounting practices. They will be much more in tune with the direction it sounds like you want to go. Elance, oDesk, and even simple Google searches for accounting practices will help you source this type of professional. It's easy to tell from their websites if they're technologically current.
Wave is awesome.
No, I'm afraid, Wave is not awesome. I would strongly caution anyone from building their accounting processes around Wave. It has some great features for integrating and and facilitating invoicing and payments, but it is an accounting nightmare the longer it's used. It lacks basic internal controls needed to keep your books accurate over the long term.
posted by bkpiano at 8:40 AM on April 25, 2015
Many "traditional" accounting practices are largely unfamiliar with the vast majority of online financial tools and finance apps. They tend to shy away from cloud-based systems and tend to prefer classic, locally hosted systems that they can exercise complete control over (Quickbooks, Caseware). Your current tax accountant may fit into this category.
That being said, there are accountants out there who specialize in what you're looking for. I'd suggest looking for accountants who run their own businesses as online accounting practices. They will be much more in tune with the direction it sounds like you want to go. Elance, oDesk, and even simple Google searches for accounting practices will help you source this type of professional. It's easy to tell from their websites if they're technologically current.
Wave is awesome.
No, I'm afraid, Wave is not awesome. I would strongly caution anyone from building their accounting processes around Wave. It has some great features for integrating and and facilitating invoicing and payments, but it is an accounting nightmare the longer it's used. It lacks basic internal controls needed to keep your books accurate over the long term.
posted by bkpiano at 8:40 AM on April 25, 2015
This thread is closed to new comments.
No. Wave is awesome. The accounting package is a gateway drug. You probably need to add Invoicing and Payments and Receipts. It all ties together, so why are you not doing that?
If you *are* doing all of that and are still flailing around, it's will be less of a products problem and more of a process problem and you should hire a virtual assistant for two hours a week.
posted by DarlingBri at 2:55 PM on April 20, 2015 [1 favorite]