Accounting, a Necessary Evil
Yes, it’s a necessary duty for all businesses, big or small, to keep track of revenues and expenses, at least for income tax reporting purposes. However, there are many side benefits to recording these details into meaningful categories to help better understand where the money is coming from and what it’s being spent on.
For a small business entrepreneur starting out, the recommendation is to set up a bank account, a PayPal account and a credit card account and let them keep track of your revenue and expenses. The next step is to install accounting software that interfaces or integrates with each of those accounts. Then all that’s required is to revue your accounting software account, on a regular basis, to categorize the revenues and expenses into meaningful buckets for further analysis.
My Favorite Accounting Software
For the money, Wave Accounting is my favorite accounting software. Not only is it free (comes with sidebar advertising) for all of the basic accounting requirements for a small business, they also provide you with free 24-48 hour email support as well as options to add on software modules (e.g. Payroll), at minimal cost, when your company grows.
Wave Accounting has many time saving features such as:
- Cloud based software where your accounting records are kept private, backed up and secured
- Automated downloads from your bank, credit card and PayPal accounts
- Minimal manual entry (usually to categorize revenue and expenses)
- Professional reports which can be downloaded into spreadsheet or PDF formats
- Income Statements
- Balance Sheet
- Sales Tax
- Accounts Payable
- Accounts Receivable
- Unlimited invoicing
- Unlimited accounts, customers, transactions and always free
Wave accounting software is being used by thousands of small businesses. The Accounting Lab people have even created a series of instructional YouTube videos to teach anyone on how to use all of the Wave features.
Here’s a review of the Wave application from the folks at Cloudwards.
I have now used Wave Accounting for the last 2 years with my son’s online business. There is no question that this software has saved me a lot of time and effort. The Wave team is always adding new features such as Bank Reconciliation. This feature alone ensures your records are always in sync with your bank, credit card and PayPal accounts.
The Report Generation feature also provides instantaneous Monthly and Year to Date Income Statements, Sales Tax collected and spent as well as a current look at the Balance Sheet. This feature provides an immediate view of all necessary details required to prepare Sales and Income Tax returns without the hassle of creating manual spreadsheets.