Launching a Small Business? Your Accounting Options
You’re starting a new business because you’ve developed a product or service that you believe will sell to the market you’ve identified. It solves a common problem. Or it’s educational or entertaining. Or it will in some other way improve the personal or professional lives of your future customers. You’ve created a business plan that shows a profit at some point.
But how will you manage your money, your incoming revenue and your expenses? You’ve probably had some thoughts in that area, but it seems like everyone you talk to is using a different bookkeeping method.
That’s because there are so many options right now. That’s a good thing, right?
It can be, if you study what’s available and think long term. Yes, it’s possible to switch to another kind of tool down the road. But that’s not always easy. And if you’re planning to grow, it’s smart to start out with a system that can stretch to accommodate your expected success.
Cloud-based accounting solutions can do just that. They’re websites, so they can be accessed from anywhere you have an internet connection. State-of-the-art applications are built on a double-entry accounting core, which is important when you deal with financial advisors or banks or investors. They help you track income and expenses, maintain records for your contacts and products, create transactions like invoices and purchase orders, and run reports that will help you make smart business decisions.
These websites are designed for small businesspeople who are not financial professionals, so they’re easy to use. But accounting is complex, and you need to have some understanding of its rules and procedures to use any of the sites available. Your accountant can help you select the right one and provide training. Cloud-based accounting solutions operate on a subscription basis, so you pay per month and can cancel anytime.
Desktop-based accounting software is also available. These applications have been around for a couple of decades, and some of them have more features and customizability than cloud-based solutions. But you’ll have to pay a few hundred dollars upfront to get one, and you may find out too late that it’s not the right fit for your business. And unlike accounting websites, these products must be installed on your computer’s hard drive, which limits your mobility.
Single-function accounting websites contain a subset of features found in comprehensive cloud-based accounting solutions. They might, for example, help you create invoices, manage expenses, and/or calculate your quarterly estimated tax payments.
And finally, you can simply use a manual accounting system. Many businesses start off doing their bookkeeping on paper, perhaps aided by Excel spreadsheets. If you’re a very small, uncomplicated company, this may work for you for awhile. But computer-based accounting:
- Saves time,
- Vastly improves accuracy,
- Makes it much easier to find needed details, and
- Creates insightful, thorough reports in seconds.
You know best what your company’s structure, resources, and goals are. Financial advisors, though, are the experts at choosing the solution that makes sense for you. Let one help you start your new professional life with the right financial tools.