When you first start your business there are a million and one things that need to be done.
- Choose a name
- Set up a website, email, and social media
- Find clients and make sales
- Open a business bank account
- File for your LLC
…the list goes on and on.
One thing that can easily be overlooked is bookkeeping. I get it, we’re not the popular kid in school 🤷🏼♀️ But whether you hire a bookkeeper off the bat or plan to DIY for a while, it’s important to track your finances somehow. How do we recommend doing that? You have a few options:
- Using a spreadsheet – A spreadsheet tracker, such as our Money Mapper, is a great option for a new business. It’s a simple way of tracking income and expenses month by month with a one-time investment. You don’t have to worry about a monthly subscription and you can use it over as many years as you’d like, over and over again! The downside is that you have to manually type in every expense and income transaction, so it requires diligence to stay on top of it.
- Xero – Ah, Xero, my love😍 There’s not much I dislike about Xero. Their integrations with banks tend to work better and have fewer interruptions than Quickbooks. Once you connect your business bank account to Xero, all of your transactions are automatically imported and all you have to do is categorize them. The reports are easy to understand and their customer service is incredibly helpful should you have to contact them. Plans start at $12/month.
- Quickbooks – Quickbooks has been around for a long time and at this point is a household name. And for good reason – they really paved the way when it came to accounting software. BUT, just because something has been around the longest doesn’t make it the best option for your business. There are some advantages to Quickbooks such as certain integration with third-party apps, but their customer service is pretty awful and I tend to have more issues with bank connections. Plans start at $25/month.
A quick word on Wave, Quicken, Freshbooks, and Zoho: If you Google “Which accounting software should I use for my business?”, you’re likely to discover that there are a lot of options out there including these. When you’re starting a business and expenses are high, it’s really tempting to want to go the route of something like Wave that boasts being 100% free.
…But here’s the bottom line – these platforms just don’t work as well. The integrations are clunky, have a lot of connection issues, and when the day comes that you’re ready to hire a bookkeeper (we know you’re going to grow and it’s going to happen!), most don’t allow for secondary users, so you’ll have to switch software anyways. This means additional setup costs to move everything over. We recommend avoiding this by starting out with a spreadsheet that your bookkeeper can easily understand, or Xero.
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
