Bookkeeping Archives | Number Nerd Bookkeeping Solutions

July 2, 2019

Building an Intentional Business with Bookkeeping

I love talking to my clients about how they got into business and hearing the “why” behind starting their business. Almost every single one has something to do with freedom. Freedom to live life on their terms without answering to a boss, freedom to spend more time with their family, freedom to provide for themselves or for others in ways they couldn’t in their 9-5. It’s part of why I started my business nearly 5 years ago too. I wanted to live life with intention and build a business that would give me time to enjoy life and focus on the things that really matter.

And yet, it’s so easy to get caught up in the day to day of running a business and forget why you chose this path in the first place. If you are not intentional about it, your business it can easily start to suck up all of your time, often MORE of your time than if you’d stuck to working in a 9-5! Once you get sucked into that hustle mode, it’s hard to step away. It often takes something big to snap us out of it.

In December of last year, some things happened in my personal life that unexpectedly took me away from my business. It made me realize just how much my business had taken over every area of my life. I realized I had stopped being intentional about carving out time for the things that really matter to me. I was spending more and more time in my business, and I was living in a way that totally went against my reasons for getting into business in the first place. I knew I had to step back and reevaluate what was important to me and how I wanted to live my life.

It’s ironic really because I talk about this with my clients all the time as we’re working on their bookkeeping. As we set financial goals, prepare budgets, and calculate pricing, I always ask my clients to think about how much time they want to spend in their business, how many hours they want to work, and whether their financial decisions are realistic with the lifestyle they want to live.

I love helping my clients see the big picture of their business so they can make better decisions and run their business in a way that supports rather than consumes their life. Connecting bookkeeping to living with intention might seem like a stretch, but when done right, bookkeeping is so much more than a record of credits and debits. It can show you which areas of your business are most profitable, which areas are the biggest drain on your time and money, and what you could do differently to increase profits while making a bigger impact and working less hours.

Many of the creative entrepreneurs I work with are hesitant to make business decisions based on “cold hard bookkeeping data” because it feels impersonal, or they’re afraid it will take away their creative freedom. In reality, the opposite is true. When you know your numbers, you have the info you need to evaluate where you are now and make decisions that lead to higher profits with less drain on your time. Which ultimately brings more freedom into your life and business.

I won’t lie, it was tough for me to face the way I’ve been running my business and realize I’d been neglecting the things that truly matter to me. Thankfully, my diligent bookkeeping meant I had the info I needed to make informed decisions about what was and wasn’t working. It didn’t take long to identify changes I could make to free up my time without hurting my bottom line. For me, that meant hiring someone to take over some tasks that felt draining to me, and cutting out a few things that I realized were no longer working.

Bookkeeping gives you the full picture so you can make those informed decisions and free up time and space for the things in life that really matter. For you, it might mean expanding your team, changing your marketing to focus on your most profitable offer, or dropping a service that drains your time without bringing in results.

The best part is you don’t have to wait for a life changing event like the death of a loved one to start making changes. You can start running your business with intention and making shifts toward working less and taking time to enjoy life today.

What’s one shift you can make in your business that will help you live with more intention?

These resources will help set up your bookkeeping systems so you can see the big picture of your business and start making decisions that create space and freedom in your life.

Get Back on Track with Bookkeeping

Do your Bookkeeping in Just 20 Minutes per Week

The Ultimate Pricing Guide for Creative Entrepreneurs

If you’d like more support, check out my DIY Bookkeeping Program, where I walk you through the steps to creating a bookkeeping system that shows you the big picture and helps you make informed decisions in your business.

June 4, 2019

Do Your Bookkeeping In Just 20 Minutes Per Week

Of all the hats you wear in your business, I bet that “bookkeeper” probably isn’t one of your favorites. I’m one of those number nerds who could do bookkeeping all day, in fact, I do! But I know that’s not the case for most people.

Possible click to tweet: Bookkeeping doesn't have to be as hard or as painful as we often make it out to be. Click To Tweet

So many business owners groan and drag their feet when it comes to doing their bookkeeping, but I promise, it doesn’t have to be as hard or painful as many of us make it out to be. In fact, my do-it-yourself clients are able to get their bookkeeping done in less than 20 minutes per week, and you can too. Today I’m going to show you the quick and easy system my clients use to do all their bookkeeping in just 20 minutes per week.

Put it on your calendar

In order for this system to work, you have to commit to doing it consistently. Choose a day and time and schedule 20 minutes to spend on your bookkeeping every week. Put it on your calendar and make it non-negotiable. Many of my clients use Fridays as their admin or CEO days, and they like to do their bookkeeping at the same time. It doesn’t matter what day you choose, but consistency and repetition is key. Commit to doing it at the same time each week so that it becomes a part of your routine.

Set the scene

When it’s time to do your weekly bookkeeping, change things up and get out of your typical workspace. Move to a different location so you can stay focused on the task at hand without getting distracted by other work you could be doing. Grab your favorite drink, a notepad, and pen, and find a comfortable place in your home or office to do your bookkeeping. This could be at your dining table, your kitchen counter, or in a different area of your coworking space. It doesn’t matter where you go, but get out of your normal routine and into your “bookkeeping space.”

Set the timer

Set a timer on your phone for 20 minutes before you start working on your books. To keep things interesting, you can race the clock to see how fast you can get your bookkeeping done. If the time runs out before you finish, that’s ok. Resist the temptation to get to a “stopping point,” and take a break. You can do a second round of 20 minutes, but be sure to get up, refill your drink, and walk around before you jump pack into it. If you still haven’t finished after 2 rounds of 20 minutes, stop anyways and save the rest for next week. You’ll keep getting faster, over time

Ready…go!

With your timer set, now let’s start bookkeeping! Your process will vary a bit depending on your bookkeeping software, or if you’re DIY-ing your books in a spreadsheet.

Sign up to get Friday Bookkeeping Reminder emails customized for Quickbooks or DIY Spreadsheets.

Start by updating your bank feed in QuickBooks Online, or downloading your bank statements and adding them to your spreadsheet so you can review your transactions. If you’re using Quickbooks, categories and rules will already be recorded for any recognized transactions. Start by reviewing those, and if they all look ok, accept them and move on to review your unrecognized transactions. You’ll need to add vendor info and categories to your unrecognized transactions, and if necessary, create new rules for those transactions to save you time in the future. If you’re using the spreadsheet method, you’ll need to go in and add vendors and categories to all of your transactions one by one.

As you’re going through, look out for any strange transactions or subscriptions that you need to cancel or follow up on. If you’re using a spreadsheet, add up your total expenses, and the expenses for each category to make sure everything adds up and you haven’t missed anything. QuickBooks should do this automatically. Now repeat these steps for each of your accounts.

Get as far as you can in 20 minutes, and when the timer goes off, STOP! If you don’t get through every transaction in all of your accounts, it’s ok. You can pick up where you left off next week, and overtime, you’ll get faster at it. Limit it to 20 minutes per week, so that it’s easy to stick to.

Review

Once you’ve finished your bookkeeping for the week, (or when the timer goes off) spend a few minutes reviewing your notes and reflecting on how you feel after doing your books. Was it more or less painful than you expected it to be? Did you get stuck anywhere or is there anything you have questions about? How do you feel after looking at your income and expenses?

I would love to hear how it went for you, send me an email and let me know!

Keep a record of how you feel after doing your bookkeeping so you can see how it evolves over time. When you can look back and see a record of the progress you’ve made with bookkeeping, it will help you to stay motivated to keep going.

When you can look back and see a record of the progress you’ve made with bookkeeping, it will help you to stay motivated to keep going. Click To Tweet

That’s it! You’re done! That wasn’t too painful was it? Now commit to doing it again next week. If you need some accountability to stick to it, you can sign up to receive my Weekly Bookkeeping Reminder emails. You can choose to get the Quickbooks, or the DIY Spreadsheet reminder emails, depending on the method you’re using.

Sign up to get your weekly Friday Bookkeeping Reminders!

I hope that this 20 minute per week bookkeeping system will help you to stay on top of your books and feel confident knowing your numbers. If you need more support to set up a bookkeeping system that will work for you, I would love to help! My DIY Bookkeeping Program is designed to help you stay on track with your bookkeeping through systems and accountability.

June 19, 2018

Wave vs. QBO: Which is Right For You?

There’s so many options available for the business owner who wants to take care of their own books. For some users, it’s a matter of price while others look more toward functionality and integrations.

I think it’s important to look at it all, especially what you need within your own business. Because no two businesses are created equal.

Let’s take a look at the difference between Wave and QBO, and you can decide which is the best bet for you. (Can you guess which is my go-to pick?)

Pricing

I know a lot of business owners are price-shoppers. While I don’t blame you, it’s important to still do your research. I believe you get what you pay for, which means that “free” isn’t always the best bet if you’re looking to cut costs. It just might cost you more in the long run if it doesn’t offer all the features you ultimately need.

QBO: Three pricing plans, depending on the features you need, starting at $10 a month
Wave: Free, with additional paid services for payroll and online payments

I know a lot of business owners are price-shoppers. While I don’t blame you, it’s important to still do your research. Click To Tweet

Integrations

How well does your bookkeeping software “talk” to other systems? In today’s ultra-connected world, your systems need to speak to one another to be more efficient–saving you time and money and ensuring that human error isn’t part of the equation.

QBO: 1,000+ with both Zapier and stand-alone integrations
Wave: Three – Etsy, Shoeboxed and Paypal only

Security

You’re dealing with bank feeds and log-ins that needs to be secure. Having something you can depend on, without the risk of your sensitive information falling into the wrong hands, is important.

QBO: Data encryption, backups and physical security
Wave: Data encryption, backups and physical security

Setup

This is the most important step, besides making sure the accounting program has all the features that you need based on your business type. If the program isn’t set up right from the beginning it will affect the accuracy of the data on your reports.

QBO: Setup in QBO is intense but straightforward if you watch the training and setup videos or have a professional help you. Expect to spend anywhere from 1 to 3 hours setting up QBO the first time. Another option is to have a professional set up your file. Then, purchase a block of training hours for particulars in the beginning.
Wave: Easier setup than QBO but still a learning curve. It might be best for a professional to help you set it up and give you some training. It will take roughly 1 to 2 hours for setup depending on the level of detail in how want to categorize your income and expenses. Wave has a great help section of webinars, videos, and guides.

Accounting

I recently wrote about cash vs. accrual accounting, a distinction that’s important for small business owners. Because many small businesses start with cash accounting, it’s important to have that option in your bookkeeping and accounting software. Only one of these systems does.

QBO: Offers both cash- and accrual accounting options plus a slew of reports
Wave: Only allows for accrual accounting

Reports & Features

Every business is different and a bookkeeping system should be able to grow with it. While you may not use all the features of a robust system early on, having access to inventory control, budgeting and tax support options is helpful as your business grows and matures.

QBO: Offers the above features, plus up to 75 different reports
Wave: Has 12 available reports, which are basic reports in QBO
QBO: Has an inventory option, category tracking and budgeting
Wave: Does not offer inventory, category tracking or budgeting
QBO: Has a reconciliation feature
Wave: Does not have a reconciliation feature
QBO: Can exclude transaction(s) but, not delete them
Wave: Can exclude + delete transaction(s)

Every business is different and a bookkeeping system should be able to grow with it. Click To Tweet

If you are planning on hiring a bookkeeper anytime soon you’ll want to do some research and find someone that works with the accounting system you’ve chosen, for both bookkeeping and training needs you might have. Find one to three professionals and schedule a free introductory call with them to discuss your options, what you are considering and why. They’ll also give you valuable information to consider in your decision making process as well. Keep in mind, professionals are biased as we are typically used to using certain programs and have our favorites. Here at Number Nerd we use a variety of programs for clients for various reasons. Feel free to schedule an introductory call with a Number Nerd professional to discuss your software options based on your business type.

I’m sure it’s so secret that QBO has long been my go-to favorite bookkeeping system for any client. It just makes sense to have the most streamlined options, and at a reasonable cost. Here’s a Wave comparison chart to the various versions of QuickBooks Online. Other things to consider when choosing a system is the learning curve and trainings available. And as you grow, you’ll want to know the best way to transition from one system to another. Of course, I think QBO is powerful enough to use with nearly any size business.

May 8, 2018

QuickBooks Online Features You Need to Use

When you start using a new tool in your business, it takes time to learn all the ways it saves you time and money. There are often little tricks hiding in the depths of the tool that you don’t find out about until months later–because you’re really just trying to get it up and running.

This is true for QuickBooks Online (QBO) and its features, especially when business owners start to use it without taking the time to set it up and learn what it’s all about.

There are so many features in QBO that it’s my go-to bookkeeping system of choice for any client. But you have to be willing to take the time to set it up right if you’re going to make the most of it.

If you’re investing in a tool for business, set it up right so you can make the most of it. Click To Tweet

Here are some of my favorite features that often get overlooked by business owners who choose to DIY their QBO set-up:

Connecting Bank Feeds

From time to time, I meet with potential clients or new clients that are not utilizing the bank feed feature at all. Either they are stuck in the old-school way of doing things or simply are not aware that QBO has this feature and the purpose of using it.

It’s the simple task of connecting your bank and credit cards accounts in QBO. And yes, that means entering your login credentials for that site into QBO and mapping that account accordingly. It is a bit scary for the non-tech savvy business owner but, once I explain it and the amount of time it will save them, they are sold.

By connecting the bank feeds you’ll see new transactions download every time you log in. You’ll see your QBO populate with each and every transaction, saving you time and limiting the chance of error.

Categorizing Transactions

QBO will automatically categorize, or code, your transactions for you–if you take the time to set up the bank rules. Doing this saves you the time of manually categorizing when you reconcile your accounts. Keep in mind you will need to invest time to do this when you first setup your QBO and each time you add a new bank or credit card account.

If you’re not setting up rules in QBO, you’re losing a lot of time categorizing manually. Click To Tweet

Without rules, QBO will try to categorize your transactions for you. And while it can often do this correctly, keep in mind that QBO is not a human and doesn’t always know what each transaction is for. It’s up to you to correct the categorizations and create rules to help QBO do a better job next time. Yep, this takes time. But it’s worth it in the end!

Account Reconciliation

You need to know where you stand financially at any given moment. When you connect your bank feeds and set up categories in QBO, reconciliation is a cinch. It’s a matter of verifying your month end statement bank balances from each bank and credit card at month end against what was recorded in QBO. This bookkeeping task is a must-do at the end of every month.

You are probably wondering, why–what’s the purpose?

Well, you want to ensure that the bank feed didn’t have a glitch and inadvertently download 2 of every transaction or skip a few. If that happens it means that your expenses are overstated and less profit in your business. Another common issue I see is overstated income, by recording customer payments twice. This happens when you use the receive payment feature and add the bank deposit in the bank feed. That means you’ve counted it twice and overstated your income. Whoops! Both overstated income or expenses are a problem and ultimately affect the business bottom line and the amount of tax you pay. So, it is a good idea to ensure the numbers are correct by using the reconciliation feature.

Time and time again I see plenty of clients that come to us for help and don’t understand why the numbers don’t make sense. Unfortunately, too many business owners skip this vital step–reconciliation–costing them loads of time later in the year. Hopefully, your CPA checks to ensure you have completed your bank reconciliations before they prepare your tax return. This step ensures the accuracy of the data they are using to prepare your return.

QuickBooks Online is truly my go-to bookkeeping tool of choice, and it’s simple enough for any business owner to use. But if it’s not set up correctly, you’re likely to get frustrated and turn to less intuitive and robust systems.

If you’re using QBO and want to get a better handle on how to fit it into your weekly bookkeeping tasks, grab my Weekly Workflow Template today! If you need help now check out our Support and Training packages and let’s chat.

April 17, 2018

How To Set Up Your Internal Accounting Processes

When you’re hiring an accountant or bookkeeper, it’s important to have a good handle on your numbers already. You’ll need to provide a list of recurring expenses and access to bank accounts, along with some other information. The bookkeeper you hire should guide you through this process like we do at Number Nerd.

But even if you’re not ready to hire an accountant now, there’s a lot you can and should do to prepare for when you are. Because the more you grow, the more complicated your bookkeeping will be–and eventually you will want to have a pro on your side to help.

These are my non-negotiables for every business owner. If you’re doing these things, and doing them well, from Day One, the transition from DIYing your bookkeeping to working with a pro will be seamless.

When you take care of your books NOW, transitioning to an accountant or bookkeeper is seamless. Click To Tweet

List of monthly expenses

If you have a budget with a clear list of your monthly expenses, you’re doing pretty well. But when you have that same list outlined and categorized, you’re doing even better. Knowing how much you’re spending each month in different categories (like bank charges, dues + subscriptions, insurance, continuing education, marketing, merchant processing fees, software, utilities, etc.) is key to finding leaks in your accounts. You’ll then want to review your numbers monthly and compare to the prior month (and ideally your budget) and ensure that you aren’t spending more than you anticipated and on track. It all depends on what kind of business you have, of course, but it’s something to audit quarterly.

Folder for receipts

You’re saving receipts, right? In the event you get audited, you need to have receipts to back up any business expenses and write-offs. But throwing all your year’s receipts in a folder or shoebox isn’t the best way to go, especially if you have a lot of expenses.

Saving your receipts in a shoebox isn’t going to help you keep your books organized. Stop. Now. Click To Tweet

I recommend using Evernote, Google Drive or that manilla folder to organize your receipts on a monthly basis. Each month should have its own space, and if you’re using hard copies of documents, clip them together by month. You can also group receipts by category or vendor if you have recurring expenses from similar vendors. When storing them electronically, be sure to have a standardized file naming convention. You also want to write on the expenses what they were for before you scan and save them. For example:

VendorName_TypeOfExpense_Date.pdf

XyzCoffeeShop_Meeting w/123 re xxx_Date.pdf

Have sales process documented

Every business has a step-by-step process they go through when acquiring a new client or repeat sale. Even if it’s not explicitly documented. The key is to get that process documented. How do you bring clients on? When do they pay your deposit? The rest of your fees? How will you deliver the product or service? Or do they pay at time of purchase?

Having your process documented allows you to better track costs and revenue on every sale so you can start to tighten up the process and your profits.

The more organized and efficient you are, the better. You’ll save time getting the accountant or bookkeeper up-to-speed. And even if you’re not ready to hire someone to help you keep your numbers in check, you’ll have a much better picture of your books if you keep tabs on everything now. Not only that, but you’ll be much less stressed come tax time.

Need to get your books organized? Download my 2018 Biz & Books Planning checklist to get started. And feel free to scour the blog archives as well for other helpful posts that will help you get a great handle on your bookkeeping.