Bookkeeping is often thought of as a chore and many freelancers and small business owners avoid the chore, or perhaps wince at the thought of doing it themselves. The problem with this is that without some kind of consistent financial record keeping method in place, you are missing the benefit of efficiency and visibility into business finances. Read on and find out why you should ditch inefficient or haphazard financial record keeping and adopt an all-in-one bookkeeping system.
If you are using paper, spreadsheets or several different systems to run your business, it isn’t any wonder that the thought of more “busywork” makes you cringe. It doesn’t have to be that way. If you have the right kind of bookkeeping system, and use it consistently, you’ll find that you save time, reduce frustration, love how organized you are, and won’t be anxious every year at tax time.
What Do You Mean by “Bookkeeping”?
Bookkeeping is an organized method of financial record keeping in a double-entry bookkeeping system. Mainly, this involves performing tasks like recording income, expenses, assets, liabilities, and taxes; and, sometimes-needed tasks such as monitoring accounts and creating financial reports. Bookkeeping generally does not help you identify income and expense trends – at least not without a little digging, but, some modern-day bookkeeping software will help you do that, too.
Why Should I Do My Own Bookkeeping?
You certainly can hire a bookkeeper or accountant, but, if you use the right accounting system, and perform routine bookkeeping tasks yourself, you’ll save time, headaches, be organized, and you’ll have much more control over your business’s financial growth.
If you are still using paper, spreadsheets, or some other inefficient method of recording transactions, you are spending time and effort for not much in return. When you finally hand over that shoebox or spreadsheets to your accountant or bookkeeper, they’ll be looking back over things that have already occurred, and not looking forward at ways to improve your business.
This is a common problem for many freelancers and small business owners. If you are dependent on your accountant or bookkeeper and do the bare minimum to record or monitor finances, you don’t have real control over the financial life of your business. You won’t have a clear view of cash flow, nor will you be able to analyze trends or make corrections before they become problems.
The main reason this occurs is that freelancers and small business owners are either 1) too busy, 2) don’t feel capable, and 3) don’t see the value. That’s why we created Flare. It’s not just bookkeeping software, Flare is small business finance software that makes it easy for you to control your business finances – without needing to understand bookkeeping or financial management. You can still consult with an accountant or bookkeeper, but learning how to use all-in-one bookkeeping software will be a huge benefit to your daily operations and your bottom line.
Bookkeeping Methods You Should Avoid or Replace
The Paper and Spreadsheet Method
If you are recording income and expenses on paper or in spreadsheets and creating invoices and estimates using a word processor’s template, you are wasting valuable time. If you were using all-in-one bookkeeping software that minds the books in the background while you perform these routine tasks and much more, you’ll operate more efficiently and have more insight into your business finances.
The “I’ll Let My Accountant Deal with It” Method
This method is still used by many. It goes like this: just keep receipts of bills and payments received, throw them in a box or envelope and deliver them to an accountant or bookkeeper once or perhaps twice per year. While this certainly reduces up-front work for you, it can create a massive headache for you at year end. Unlike you, your accountant or bookkeeper doesn’t have eyes on your daily business dealings, so any questions they have for you at year end, you’ll have to answer. You’ll have to remember details about transactions that may have faded in your memory. More importantly, you only get to look back over the past. There is no opportunity to analyze and correct as issues arise.
The Several, Incomplete Applications Methods
This is another method used by many freelancers and small businesses. Perhaps you use one application for invoicing, but still have to track other finances in spreadsheets. Maybe you have an app for both invoices and expenses but at the end of the year, you don’t have reports you can send to your accountant. The problem with this method is that managing business finances in several places is inconvenient and time consuming. After all the work and hassle, you don’t have everything you need, such as budgeting tools, bank reconciliation, financial reports, or business financial performance metrics that can help you increase business profit.
All-In-One Bookkeeping Method in the Cloud
All-in-one bookkeeping systems, as the name suggests, do much more than bookkeeping. Flare online business accounting software is such a system. It is complete double-entry bookkeeping with all of the features and tools needed to make running your business easy, and a little fun, too.
While Flare lets you easily perform all of the routine tasks that you require, such as creating invoices, professional estimates, and tracking expenses, it does so much more than at first meets the eye. It’s what’s happening behind the scenes – without your intervention or expertise– that is so powerful. When you are recording invoices, invoices payments, bills, bill payments and other transactions, Flare is at work in the background, doing the double-entry bookkeeping that you don’t have the time or the inclination to do. While you are doing all of these things (in one place) Flare is recording all of this financial data to accounts, reports, charts and graphs.
When you want to see how your business is doing NOW, you can. You’re just one click away from Flare’s dashboard with its account summaries, income and expense summary, performance charts and graphs and budget vs. actual overview.
Here’s the deal sealer for most people. You have to record income and expenses somewhere. You have to create invoices and estimates somehow. You have to keep your eye on bank accounts somehow. If you can easily do all of these things yourself, within one online application, in little time, why wouldn’t you? You’ll get the full benefit for little work. You’ll know how your business is doing, you’ll be able track income by customer, and expenses by vendor. You’ll have performance metrics and a budgeting tool that can help you plan for financial growth, and, at tax time, you’ll just invite your accountant or bookkeeper to use Flare, or, export and email them the financial reports they need to complete your taxes.
Bookkeeping doesn’t have to be something you avoid, or something you completely hand over to a bookkeeper or accountant once or twice per year. Freelancers, small businesses and home-based businesses can quite easily take control of most bookkeeping tasks by using a cloud accounting system like Flare. If they do, they’ll reap immediate benefits like being more organized and efficient, saving time, having more control over business finances, and having more influence over their business’s financial growth.