When you're just starting out it may not be important to go too deeply into the subject keeping of accounts and records which terrifies many people, but as your business starts and grows it will become more important.
To try to lessen the terror which some people feel over this just think of accounting as a way to keep score. You want to know if you're winning or losing in the game of business, and bookkeeping with a good accounting system will let you know where you stand.
There are a couple of basic fundamentals which are vital to take into account if you're new to business, or have never run a business of your own. To an old hand, these seem pretty obvious, but sometimes they cause problems for new comers, so if you're in this category, please pay attention. If you're an old hand, please bear with us ... we won't take long.
First. Keep your business and private funds separate.
Some people seem to get upset that some total stranger might dare to tell them how to run their business, but if you want to keep score and know if you are making a success of it or not, it is essential not to mix business money with pleasure money.
This is in no way telling you what to do with your money, but simply putting things in order so you can know whether or not your business is worthwhile, or whether you'd be better off doing something else. All we're suggesting is that when you spend money on something personal, you make note of it being a personal expense and realize that it is coming out of your business.
I'm sure almost every experienced accountant or bookkeeper can tell stories of businesses which were successful but which ran out of money and went bust because the owner didn't know how to keep personal business and business business apart.
Second: Be Honest and Accurate.
Above all, the reason for bookkeeping in a business is to keep score for yourself. If you make entries which are not accurate, or which do not truely reflect what is going on in your business, it becomes a real waste of time.
Perhaps you might have some reason to want to distort the actual performace of your business ("cook the books") and I'm not about to argue whether or not you are justified in doing this. My sole point is that if you don't have a true picture for yourself, anything you may produce for someone else isn't going to help you run your business unless you know what's really happening.
Today, keeping track of your business is not a tedious and boring process of writing columns of numbers into pages and pages of ledgers like it was in the past. There's a lot of good accounting software around to help run small businesses.
Personally I like QuickBooks because of it's low cost, flexibility and good reporting features even though I don't care for their customer support. The reason that I keep on using QuickBooks and even up-grading from year to year is that it is such a good product that it doesn't need much support. Look for the QuickBooks icon at this site.[Intuit]. Don't confuse QuickBooks with Quicken. They come from the same company but they are different.
Other accounting programs which I've seen, and which I would consider using if I weren't already used to QuickBooks include: MYOB (Mind Your Own Business) [MYOB], Simply Accounting [Simply Accounting], and Peachtree Accounting [PeachTree.com].
Spend some time in choosing this kind of software because once you get started with one, it becomes difficult to switch to a different brand.
You get used to doing things in one way and it may be cumbersome to switch to another. There is no universal portability in accounting software even though you may be able to export and to a more limited degree import limited certain reports or data.
