Accounting tools

It takes time to make time...what I learned about my business after tracking my time for 30 days

It Takes Time to Make Time

What I Learned About My Business After Tracking My Time For 30 Days

 

Similar to other entrepreneurs, launching a business was my declaration of freedom. Freedom to authentically express my creativity. Freedom to have limitless income potential. And freedom to spend my limited time here on earth exactly how I wanted to. And thankfully, I live in a moment of history where the only limitations I have as a business owner are my imagination and the strength of my internet connection.

 

Oh, and how effectively I manage my time...

 

As Lori Greiner, entrepreneur and star investor on Shark Tank often says, “Entrepreneurs are the only people who work 80 hour weeks to avoid working 40 hour weeks.” If anyone tells you that they work less hours as an entrepreneur, they are either lying or delusional. Waking up at 5 a.m. and finishing my day at 10 p.m. is a common occurrence for me. My day can consist of photo shoots, writing, happy hour mixers, marketing campaigns, working with clients, and more… everyday is different and I love the variety in my schedule.

 

In fact, I’ve found that I am most productive when I’m not forced to adhere to a specific schedule and obsess over the time I spend on each project.

 

Or am I?

 

Was I Sacrificing Productivity In Effort to Retain My Freedom?

 

A couple of years ago, I came across a company called TSheets, the “#1 time-tracking app.” We first met on Twitter and then I connected with their team at an accounting conference. It seemed like a great product for companies with employees. But since I didn’t plan on hiring employees in the near future, I didn’t think too much about it.

 

However, as TSheets does, their branding draws you into their world and I found myself curious to learn more about them as a company. Their electric energy and passion is a refreshing addition to accounting conferences, and I fell in love with their team and mission to help others “be bold, be brilliant, and be badass.”

 

After a series of fortunate events, I connected with their Accountant Program Director, Kelly Bistriceanu, and decided to become certified as a TSheets PRO. As a certified user, I learned the ins and outs of the product and how it can help my clients. In order to recommend the product authentically, I decided to test it on myself for 30 days to see how it worked and how it could benefit my clients that are also solopreneurs.

 

OMG. Talk about resistance. I was not at all excited about tracking my time. To me, freedom is doing what I want to do and when I want to do it.  And I’ve worked really hard to build a sense of freedom in my business. Just the thought of clocking in and out brought up a sense of dread within me. But, I like to be challenged, so I decided to view it as an opportunity to learn more about myself and habits.

 

It Takes Time to Make Time

 

The first thing I did was set a reminder within TSheets to clock in. Every morning at 10 a.m. I received an email to remind me to clock in. What a wake up call! I was usually already knee deep in work by 10 a.m., but had no idea how much time I had spent on any given activity.

 

The first week, I ignored the notifications. It seemed like such a hassle to take five seconds out of my day to clock in and clock out. Hmmm, telling.

 

The second week came around and I made a conscious effort to start clocking in. But then I had trouble remembering to clock out for my breaks and when I switched tasks. It still seemed like a huge hassle to break my concentration in order to clock in and out during the day.

 

By the third week, I started having a few a-ha moments. I realized that while I like having variety in my days, my schedule was too erratic to be efficient. I would leave assignments half-finished or I was easily distracted by emails. And I was grossly inefficient on some tasks (such as social media) and completely ignoring other key tasks (like sales).

 

Let me emphasize that point. Sales. The top line of every business. I did not carve anytime within my schedule to bring revenue into the business. Nor did I have a system in place to generate sales. Marketing, yes. Sales, no.

 

That’s when it hit me. Time is literally money.

 

Keeping Track of My Most Precious Commodity

 

Similar to the discipline I have cultivated to track my expenses when I do my books, I now needed to bring awareness to how I spend my time. Because time is something I will never get it back. Not using my time efficiently was like flushing hundreds down the toilet. Or the difference between being able to buy a couple of new pairs of Tieks or wearing flats from Payless. (No shade on Payless shoes, but they hurt my feet.)

 

After tracking my time for 30 days, I feel as if I have a much better handle over my schedule and my priorities. I realized that in order to take my business to the next level, I needed to devote more time to sales activities. Before, I had zero hours dedicated to sales per week. Now I spend two hours every morning on sales activities. And since I do not have any formal training in sales, I hired a sales trainer to help me put systems in place in order to improve my results.

 

With a better understanding of my priorities and goals, I created Financial Foundations for Coaches & Consultants. This will be my focus and signature training program for the remainder of 2016.

 

Now that I have one service offering as a priority, I can streamline my day, easily manage my current client relationships while continuing to grow my company’s revenues.

 

Thank you, TSheets, for the renewed sense of clarity and structure you gave me for my business. You are more than a time-tracking app, you are a business transformation tool.

 

Danetha Doe is a financial strategist for small business owners. She was selected as one of the Top 40 under 40 accounting professionals by CPA Practice Advisor in 2015. Her signature program, Financial Foundations for Coaches and Consultants, is a 6-week training course to help project-based solopreneurs learn how to easily track their income, expenses and tax liability on a daily basis.

 

 

Top 6 Fave Bookkeeping Programs

Alright, you're ready. You're ready to take your business to the next level and upgrade your systems. Maybe you're still wearing all of the hats in your business, not quite ready to hire a bookkeeper, but anxious to get a true money game plan in place.

And you think--well, I should get a bookkeeping system. All the cool kids use it.

But, YIKES. Do they really all look like something your grandmother would use? Seriously, who even uses their CD-ROM anymore? And why isn't there an app for that?

Have no fear, my dear. There are bookkeeping programs made for the modern, and creative, entrepreneur. Programs that are beautifully designed, intuitive and make the whole bookkeeping experience that much more delightful.

Check out my top 6 bookkeeping programs and why I dig them.

Please note- in order to be on this list, each program had to offer a 30-day free trial. And have an online version. So you can be the jetsetter entrepreneur that you were always meant to be. 

 

  • Xero
    • With a tagline that says "beautiful accounting software", how could you go wrong?
    • Stand-out features: Design! It's simply gorgeous. Multi-currency capability, integrates with hundreds of applications (like CRM, time tracking, inventory, etc) and they have a wealth of small business guides
    • Drawbacks: Although intuitive, if you are not working with an accountant it may be difficult to set up correctly. It has a lot of reporting capabilities, but some accountants may find it to not be as robust as other tools.
    • This is perfect if you are a business owner that has started to earn money and have different pieces to your business like inventory, time tracking or payroll. If you appreciate great design, Xero is really easy on the eyes.
  • Wave
    • The only accounting option that is completely free! The only thing you pay for is payroll, but if you're just starting your business you probably don't need to worry about this.
    • Stand-out features: I repeat, it's free. Beautiful and simple invoicing features where your clients can pay you immediately on their phone. Personal finance feature with budgeting. Also, if you co-mingle your business and personal transactions it's really easy to separate. 
    • Drawbacks: The reporting can be a little tricky to understand because they use accrual and not cash basis reporting (it's a silly accounting thing). Basically, if you send an invoice in October, but don't get paid until November, your reports will show that income was earned in October. Technically, this is the proper accounting (read: according to accountants), but isn't helpful when you are keeping a close eye on your bank account. Your accountant will know how to deal to with this, but if you aren't ready to hire one this can be confusing.
    • This is perfect if you are a business owner that has been in business for under 3 years or are a strictly service based business. If you find it hard to separate your business and personal expenses, this is the best product for you.
  • Freshbooks 
    • They totally believe that billing a client should be painless. I happen to agree. And you should too.
    • Stand-out features: One of the best invoicing options and seamless integration with capturing receipts and tracking time. Super straight forward tool that cuts through the unnecessary accounting hoopla.
    • Drawbacks: By cutting out the accounting hoopla, accountants may not be able to run comprehensive reports. Depending on your business, this may be ok or your accountant can export your file to Quickbooks.
    • This is perfect if you are a business owner who sends a lot invoices and needs to track your time and expenses. If you are a consultant or coach, this is a fabulous choice.
  • Quickbooks Online
    • Everyone and their grandma has heard of Quickbooks. They are one of the most established companies in the world and the first to move accounting from awful paper ledgers. Thank you, Intuit.
    • Stand out features: Extremely customizable reports and the most robust accounting capability for small business owners. Also, every accountant knows how to use Quickbooks and will be comfortable working with your file once you're ready to hire her. If they don't know how to use Quickbooks Online or the Desktop version, I would give them the side-eye.
    • Drawbacks: While they are actively building their online application to keep up with competition, there still spend a lot of time and money to promote their desktop version. (Quickbooks, I love you. But, please stop this.) While I've always had a pleasant experience with their customer service, sometimes the reps are not as knowledgeable on the online version. And unfortunately, modern business owners still view them as a tool for their grandma.
    • This is perfect if you are business owner with lots of varying accounting transactions and want to use something that's tried and true. If you think your business is going to grow to include a lot of different pieces, and you want to make sure your accountant knows how to use it, QBO is a great choice.
  • Kashoo
    • One of the most innovative teams I have ever met in an any industry. Let alone the accounting industry. 
    • Stand-out features: You can create different projects within the system and track their related expenses. You can complete bookkeeping tasks off-line (super rad!) and if you happen to mess up the setup of your bookkeeping system- no worries! When you do find an accountant to work with, Kashoo has made it super easy for them to fix. And it's optimized to work on your iPad---probably why they are the top downloaded accounting application on the iPad.They also have weekly Thursday webinars where they share tips on how to grow your business. 
    • Drawbacks: It doesn't support inventory or integrate with POS systems.
    • This is perfect if you are a service based business owner that considers your work to be primarily project based. If you are an iPad lover, travel often or your accountant still uses Quickbooks Desktop (they have created a seamless integration), Kashoo is awesome.
  • Sage
    • This product will grow with your business and has the capability of handling corporate-level or enterprise functions.
    • Stand-out features: You can create different projects within Sage and if you scale your business, it will grow with you. With a monthly price that starts at $9 per month and extensive reporting capabilities/accounting functionality, it is a great tool. On a branding note, Sage is super supportive of lady entrepreneurs. Loooooove this!
    • Drawbacks: Without an accounting background, it may be a little intimidating. And as you begin to scale, Sage has some pretty heavy competition with products that provide enterprise functionality.
    • This is perfect if you are a business owner that deals with inventory in various locations and want an all-inclusive product.

Do you use any of these programs?  Leave a comment and tell me about it.

Danetha Doe is the author of a Simple Guide to Accounting and Financial Strategy for New Entrepreneurs. She is the founder of Danetha Doe Consulting, a business development agency based in San Francisco. Connect with her on Twitter, @danethadoe.

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Cloud Accounting: My Love Story

Cloud accounting is the most fabulous thing to ever happen to small business owners and financial professionals. As it becomes more mainstream and the novelty wears off, cloud accounting companies need to find creative ways to carve out their unique niche in the market to continue to stay relevant. Read below to hear why, as a girl who loves celebrity gossip, I'm obsessed with this new industry and my advice to them as they grow their businesses.

I remember the first time I heard of "cloud" accounting. I was at my desk, buried under a million spreadsheets and trying to make sense of a thousand invoices and contracts and systems that didn't talk to each other. At the time I was at a ski resort and in charge of making sure our group visitors paid "accurate" invoices. Accurate is the operative word when I had to reconcile lodging, restaurant, ski and Food/Beverage systems that did NOT integrate. At all.

It was during one of those days that I wanted to throw my desktop out onto the ski hill, that I came across a company that had an interesting name. 

 Before cloud accounting, my days were dark and lonely.

Before cloud accounting, my days were dark and lonely.

I looked up their website and it was love at first sight. Beautiful accounting software with Tiffany blue all over their marketing material. I literally heard the angels singing and realized this was the only way to get me, or any other accountant who actually liked having a social life, to begin to enjoy their job.

Their name was Xero.

I immediately became a fanatic about cloud accounting and researched all of the other companies within the space. I literally stalked Xero on social media, frantically researched the online version of Quickbooks, Sage,  Wave... Kashoo...Freshbooks (btw, why is Canada so obsessed with accounting? ...hmmm...a peaceful global takeover is brewing. You heard it here first).

All of these companies were popping up and I wanted to tell them all how much I loved them.

Strange coming from a girl who loves watching Keeping up with the Kardashians. But, I've always wanted to work with numbers since I realized at the age of 5 that money could buy me all the Barbies in the entire world and by the age of 8, I was creating budgets and projections for the fun of it.

If you've never been an accountant that knows that they love what they do, but HATES how they have to do it, it would be hard to understand my seemingly manic obsession with these companies. I literally wake up in awe, every single day, about the powerful way these tools are integrating data from various sources and doing it in such an aesthetically pleasing way.

Tissue, please.

 Now everyday's my birthday with cloud accounting.

Now everyday's my birthday with cloud accounting.

When I wrote my first post about the future of  accounting a little over a year ago my poor little site crashed and I was contacted by Thompson Reuters because "for an accountant, you write really well."

I knew I was onto something. Because for me, cloud accounting is not just a means to make a TON of money (read here how I scored my first 6-figure client), it's about a lifestyle.

Cloud accounting is a lifestyle that allows someone, who in the past had been forced to be in the background and hide behind computer screens and tax returns, a life of luxury and freedom.

Finally, financial professionals can be jet setters and the trusted go-to experts for small businesses and corporations everywhere.

And it allows young finance professionals to immediately make their mark without waiting for some thirty years to pass before someone finally realizes that they have something fabulous to offer. 

As small business owners and accountants become more comfortable using cloud accounting, and the novelty wears off, it's important that these companies find ways to differentiate themselves.

 Cloud accounting is a lifestyle. Rockin my Tieks and drinking champagne while doing my books. HEYYY! #MoneyandMimosas

Cloud accounting is a lifestyle. Rockin my Tieks and drinking champagne while doing my books. HEYYY! #MoneyandMimosas

You can't be everything to everyone. And as soon as you try to be, you'll lose the loyalty of your die-hard fans.

I get questions daily about which accounting program is best for such and such business; and if I wasn't so obsessed with these programs it would be hard for me to share which one is best for each unique business.

As an accountant, I started off by marketing only to beauty and fashion professionals. Why? Simply because I liked fashion shows and was the only financial professional attending these events. A clear brand identity was key for me to make a name for myself as a young professional.

Accounting programs need to do the same thing. There is plenty of room for Kashoo, Wave, Freshbooks, Quickbooks, Sage, Xero and others to all have a piece of the pie.

Having a strong brand identity is essential to making sure any company stays relevant. Especially accounting tools that, on the surface, seem to do the exact same thing.

How should they create a solid brand? Check out my 7 tips:

  1. Get clear on what makes your product different- if you need an example, check out my post on Kashoo. Their partnerships with Paychex and Liberty Tax are fabulous. And they allow an accountant to "copy" a business file just in case a new small business client didn't create theirs correctly.  
  2. Get clear on what you're not- Wave is a free solution and an excellent introduction for business owners. I've recommended them to entrepreneurs who are not quite ready to hire my services or feel that they can handle it themselves. However, Wave does not, and should not, include an eco-system of integrations and sophisticated accounting functions. It's clean and easy, not full of fancy accounting options.
  3. Get clear on who you're speaking to- Freshbooks is a fab example. They are known for invoicing and clearly state that they are for companies with under 9 employees. Genius.
  4. Develop a unique online presence- Xero's website is absolutely gorgeous and speaks to those that are design minded. They also offer a TON of free content supporting small business owners and accountants looking for ways to grow their business.
  5. Capitalize on your established community- Quickbooks clearly has the upper hand and rightfully so. Continue to build with those that already love you. Whether it's sponsoring events put on by your accountants or spotlighting them on your site or social, show them that you LOVE them. 
  6. Have a social mission- Sage is a huge supporter of businesses owned by women. They make this very clear on their social media and events they choose to sponsor. Your users want to know you're human and care about what's going on in the world.
  7. Find unique ways to engage your accountants- Sorry, but a free accounting profile is boring and everyone does it. Get creative.
  8. BONUS: Contact me!-  HA. But for real. This isn't even a shameless plug. Just a plug. Have you seen my portfolio? Click here. If you want to have longevity, start tapping into the 20-something accountant generation.  Just sayin.

Danetha Doe is a product launch strategist and total geek about cloud accounting. She likes giggling, champagne and playing with money. She has worked with brands such as Google and Neutrogena.

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Rockstar Profile: Kashoo's innovative approach to accounting

What does a mountain biker and a world-class singer/songwriter have in common?

An accounting system for their businesses that they love to brag about.

Not something you'd expect when the mere thought of accounting induces heavy sighs and strikes fear in the hearts of most small business owners.

At least until technology took a firm hold of the industry. And companies like Kashoo, based in Vancouver, came on the scene to offer business owners a new way to handle their finances and work with their accountants.

  Money and Mimosas™, a daily podcast, covering everything you need to know about accounting & technology is launching this month.   Click here to be the first to know about it!   *Muah*

Money and Mimosas™, a daily podcast, covering everything you need to know about accounting & technology is launching this month. Click here to be the first to know about it! *Muah*

With Kashoo, data entry is virtually eliminated. Allowing business owners to see where they stand in the present moment and removing the burden previously placed on accountants to track down receipts and other mundane tasks.

And while innovation isn't something that accountants are accustomed to seeing, and some may feel that their livelihood is being threatened, the opportunities that Kashoo and other cloud accounting tools are providing is game changing. And accountants stand the chance make a fortune if they are willing to embrace these tools and require their clients switch to mobile applications. For tips on how to hit it big as an financial professional, click here to read how I landed a 6-figure project as an accountant.

This past Wednesday, Greg Fandrick, CMO of Kashoo, led a presentation in Oakland, CA. Just one of the many stops on their tour in the United States to chat with accountants and business owners.

Btw, when was the last time you heard of an accounting company doing a tour? Sounds like rockstar status to me. Yay! #moneyandmimosas

The Oakland presentation was hosted by the Quickbooks and Business Coaches organization and faciliated by its founder, Doug Skinner CEO of Honest Intentions.

 Hanging out with Doug Skinner of Honest Intentions and Gary Fandrick, CMO of Kashoo.

Hanging out with Doug Skinner of Honest Intentions and Gary Fandrick, CMO of Kashoo.

Immediately, Fandrick displayed the creativity and innovative flavor that Kashoo embodies with an opening slide that shared the main differences between him and the CEO, Jim Secord. Pointing out the fact that Fandrick has hair. Secord does not. A few laughs from those in attendance, Fandrick went on describe where Kashoo has carved out its niche market and its plans for the future.

Read below for Kashoo's three main competitive advantages:

  1. Offline bookkeeping: their iPad app, which is the #1 accounting app on the iPad with over 150,000 downloads, allows you to perform full accounting tasks without an internet connection.
  2. Integration with Quickbooks: genius move to create a seamless integration with Quickbooks desktop which still, unfortunately, holds 92% of the market. People, puh-lease move to the cloud already.
  3. Whiteboxing: Not a common practice within accounting. Kashoo is allowing more established brands like Paychex and Liberty Tax use their functionality under the guise of their more recognizable name. I believe this is a gorgeous strategic move.

I am so stoked to see how Kashoo's innovative approach to technology will play out and affect how accountants position their services.

Now, I would love to hear from you! As an accountant, how do you think these technological advances are affecting your practice? Or if you work with an accountant, how does this change your relationship? 

Feel free to leave a comment below!

*Muah*

Danetha

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Danetha Doe is a business strategist and product launch expert. Her consulting practice helps businesses launch new apps, services and products and has worked with companies like Google and Audi. You can view her services, here.

 

How to create a financial plan for your business

One of the hardest things for us to do as entrepreneurs is to make financial plans and commitments when we have no idea how much we'll actually earn.

Doing your books, also known as bookkeeping, is not a boring task that we have to do for taxes. It's also a way for us to plan for the future and design our dream life.

 Money and Mimosas™, a daily podcast, covering everything you need to know about accounting is launching this month.  Click here to be the first to know about it!  *Muah*

Money and Mimosas™, a daily podcast, covering everything you need to know about accounting is launching this month. Click here to be the first to know about it! *Muah*

Want to buy a new tablet or invest in a new marketing campaign?

Or what about that photoshoot that you've been dying to have to showcase your new line of products?

Or that brand new wardrobe you want to buy for your upcoming conferences?

When the money comes in, there are so many things we could spend it on. A bookkeeper, a new website, makeup, a conference ticket, a marketing consultant, a website designer, clothes, an attorney...

Goodness. How do we know which expenses make sense for our business now versus ones that we can table for later?

This is where doing your books comes into play. Whether you have a bookkeeper, or you're doing it yourself, doing your books allows you to create a plan for your revenue.

While there isn't a one size fits all for businesses, I like to use the 60/20/20 rule when determining how much of my clients' revenues should be dedicated to which expenses.

  • 60% of your revenue is dedicated to fixed costs, taxes, consultants and other related expenses.
  • 20% of your revenue is dedicated to growing your business and related marketing efforts.
  • 20% of your revenue is dedicated to your salary and "play" account. This account allows you to try new things and experiment with different offerings.

When you want to have a successful business, you have to know how you will spend or save the money that comes in before it does. We all know the saying, failing to plan is planning to fail.

 Doing your bookkeeping doesn't have to be boring!  Join the party  and learn why creating a financial plan for your business is FUN. #moneyandmimosas

Doing your bookkeeping doesn't have to be boring! Join the party and learn why creating a financial plan for your business is FUN. #moneyandmimosas

Today's tweetable:  If you want to design your life, you have to create a financial plan for your business.- Click to tweet.

Of course, you're the boss and if you need to tweak these percentages because you're doing a major hiring push or marketing campaign, then you make the call.

How often should you create a spending plan for your business?

I believe a plan should be created at the beginning of every year and reviewed at the beginning of each month. 

If you need a little guidance in this area, here's a free worksheet to help you plan out your happy hour business dates and how much you should spend working with a financial strategist. (I'm half-kidding about the happy hour dates).

You can click here to download it. 

I want to hear from you! What is one upcoming expense that you need to plan for in your business? Leave a comment below.

Want more weekly tips that I only share with my newsletter community? Sign up for Money and Mimosas below.

Danetha Doe is a business strategist and product launch expert. Her consulting helps businesses launch new apps, services and products and has worked with companies like Google and Audi. You can view her services, here.

Why you're doing your accounting wrong

 Money and Mimosas™, my weekly bookkeeping date, is now a daily podcast covering everything you need to know about accounting! Sign up for my newsletter (in the Tiffany blue box above) to be the first to hear about its official launch on iTunes and Stitcher.

Money and Mimosas™, my weekly bookkeeping date, is now a daily podcast covering everything you need to know about accounting! Sign up for my newsletter (in the Tiffany blue box above) to be the first to hear about its official launch on iTunes and Stitcher.

Oh, the wonderful world of accounting. Numbers and reports for days on end. While this sounds like a chocolate covered dream to me, if you're like most small business owners accounting doesn't exactly light you up inside.

Sure, we all know that it's important but why? What exactly is accounting? And are you doing it wrong? There are a lot of applications out there that do a good job of adding up different financial numbers within a business, but are they really doing the accounting work for you?

Many small business owners fall into the trap of thinking that accounting is only good for filing taxes. But, there are bajillion other reasons why you need accounting to make sure you stay in business and continue to grow your profits. 

For more reasons why accounting is good for business, other than just filing taxes ,be sure to read my post, " What your CPA isn't telling you."

So what exactly is accounting and what should you look for in the software you use? Rob Maurin, VP of Brand Engagement at Wave did a fabulous write-up explaining what double entry accounting means and why you need it for your business. Wave is an absolutely fabulous cloud accounting tool (I use them for my business and adore them!). Their support staff is top-notch and always willing to help with any tech and/or accounting related issues. Read below about their take on the importance of accounting for all businesses.

Danetha Doe is a business strategist and cloud accounting expert. Her consulting firm helps businesses launch new apps, services and products with ease and has worked with companies like Google and Audi. Contact her directly at danetha(at)danethadoe(dot)com.

Original Post is by Rob Maurin, VP of Brand Engagement at Wave-click the link to read

If you look at online reviews lately, the term "accounting software" gets applied to anything capable of adding two numbers together. So expense trackers, invoicing applications and other lightweight software in the cloud get lumped in with real, double entry accounting applications like Wave. It drives me nuts.

But is that bad?

Actually, yes, it is. And not just because I like promoting Wave. When small business owners use a "lite" software tool to do their accounting, it can cost them money and hurt their business.

If you're running a business, you need to use a double entry accounting system. (What's double entry and how do you recognize it? See the end of this post.) The good news is that you don't even need to know what double entry is! The double entry work happens behind the scenes, and sets you up for better success, with more money in your pocket, without requiring any special work from you.

But don't take my word for it. I asked some independent small business accountants for their perspective on whether double entry accounting matters. Here are some of the reasons they gave:

Reason 1: Double entry accounting will minimize your income tax.

Deductions and proper reporting can make a huge difference to any business. “It matters for every small business, even little ones that sell things on Etsy,” says William Lopez, Partner at TropezCPA and Founder of AdvisorFi in West Palm Beach, Florida. “I tell them, ‘You use a computer to log onto Etsy? OK, that’s a fixed asset we need to depreciate to save you money'."

"For bigger businesses, I tell them about a client whose tax bill I chopped from $150,000 to $30,000 just by flipping the accounting method and utilizing the double entry side of things. Without double entry, I can’t do that.”

Reason 2: You have a business loan. Or you might want one some day.

"Without real double entry accounting, you might not be able to get a loan in the first place,” says Anna Abbruzzese, president of Actium Consulting Inc. in Toronto, Ontario. “Lenders want to see a balance sheet,” and you can only get a balance sheet with double entry.

Think of the stuff you need in order to get a personal loan or mortgage: The bank wants to know your assets like cars, property, investments and so on. Same goes for your business loan. A balance sheet will provide the right info. An expense tracker or income/invoice tool will not.

Once you have the loan, you need to track it properly, too, and you can't do that without double entry. “Invoicing applications might track your income and expenses. However, a loan isn't income,” says Maggie Geiser, an accounting and bookkeeping advisor in Vancouver, British Columbia. “The interest that you pay on that loan is an expense, but the principal you pay is not. How do you track that without proper double entry?”

Reason 3: You want to be awesome.

“Research shows those who use full double entry accounting are more confident and have a better understanding of what they need and what they can do to make their business more of a success,” says Abbruzzese.

Reason 4: You want your business to grow.

“If you think your business is going to grow at all, and you want to develop good business habits,” Geiser says, “double entry is absolutely the way to go because it will discipline you and get you looking at the reports you ought to be looking at.”

Reason 5: Business decisions matter to you.

“You can’t make accurate decisions without having a complete financial picture,” says Andrew Wall, CPA, CMA, a partner at Wall & Associates in Toronto. “And without double entry accounting and without a balance sheet, you don’t know the financial position of the company.”

Lopez adds, “Within the balance sheet I derive a lot of intelligence, like: How efficient is your company? Are you even aware that it takes you 40 days to get paid from an invoice?” 

“Especially with small businesses where things are changing — and changing rapidly — people need to be able to make informed decisions quickly and accurately,” Wall concludes.

 

There's more, of course. Anna Abbruzzese told me, "We would never work with a single entry accounting system. Ever.” But ask your own accountant and form your own opinions. 

 

When is it OK to not use double entry?

There used to be 3 good reasons to avoid old-school double entry accounting software:

  1. It was too hard to use.
  2. It was too expensive.
  3. It took too much time.

That's no longer the case, especially with Wave. So today, in the same time and with the same effort it would take you to do it wrong with "lite" software, you can do it right with a double entry accounting system in the cloud.

"Lite" software may have its purpose — some of it is pretty great at its intended purpose, like invoicing or expense tracking. But don't confuse it with accounting, or you could wind up paying for it, now and down the road.  

 

How do I know if my software is real accounting or "lite" accounting?

Here's what you need to look for, or ask for:

  • Simply asking if something is double entry is usually enough. A real double entry application will tell you that's how they crunch your numbers. 
  • If the software doesn't give you a Balance Sheet, or only has a work-around solution to get you close to a Balance Sheet, then it's not real double entry. A Balance Sheet is a critical report that any accountant will need to save you money. And as you get more experienced, you'll be able to learn from it, too.
  • A proper accounting application allows you to create Journal Entries or Journal Transactions. This is the old-school way of entering info into an accounting application, and it illustrates what double entry means. In each Journal Transaction there are two offsetting entries. It allows you to track where money came from and where it went, and a whole lot more. If your software doesn't allow you to use Journal Entries/Transactions, it's not real accounting.

If the software you're considering covers these 3 bases, you're probably looking at a real, double entry accounting application. Of course, Wave offers all these features and then some.

As I mention above, the great news is that you don't actually need to know what's happening under the hood of a double entry system. What's important is that it is a double entry system, and that those powerful tools and reports are available for you and/or your accountant when you need them.

So next time you see someone say "accounting software" when what they mean is "expense tracking" or "invoicing tool," please join me in sending them the graphic at the top of this post! You can get it any time from http://bit.ly/REALaccounting .

Danetha Doe is a business strategist and cloud accounting expert. Her consulting firm helps businesses launch new apps, services and products with ease and has worked with companies like Google and Audi. Contact her directly at danetha(at)danethadoe(dot)com.

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Want to attract the best independent contractors? Make sure you do these 3 things

One of the toughest aspects of balancing your company's cash flow is finding the balance between paying your independent contractors while waiting for payment from your clients.

As the former Controller for a multi-million dollar creative firm, this was one of the consistent areas of the business that kept me up at night. Mostly because the "financial" part of my brain would say that we needed to wait until we received payment before cutting checks to our freelancers.

But, the other not so business-y side of my brain remembered what it was like to be an independent contractor waiting anxiously for a payment to cover my own expenses. And sometimes the wait would be 60-90 days after the service was delivered. Although this was common within the industry, it was the agency's that made the extra effort to pay me within 30 days that I loved working for the most.

And when I became the Controller, I consciously chose to listen to that other side of my brain to determine when to issue payment to our contractors. We consistently paid our freelancers within 30 days of the completed assignment, with an internal goal of issuing payment within two weeks. Whether or not we received payment from the client.

Because, let's face it. Independent contractors have the ability to work for anyone and there are hundreds of agencies available to hire them. Just like the contractor, your company needs to stand out in order to attract the best and most reliable talent. And the best way to do this is to treat your freelancers and contractors like gold.

But, I also recognized that it can be tough to do this when you have big revenue projects where the client doesn't pay you in a timely fashion. Some of my firm's big clients like Verizon and T.D. Williamson had such large Accounts Payable departments that it could take up to 180 days to receive a check from them. 

To counteract this, one of the initiatives that I put in place was to make sure all large contracts had a monthly retainer component. This way we would have enough cash to pay our bills, including our contractors. Once the project was completed, we would deduct those payments from our final bill. 

For example, prior to me taking the Controller position, if we had a $1M project with a large company our contract would state that we would receive payment once a quarter after they received an invoice from us. Unfortunately, once they received the invoice it could take another 30 days to see the money. For us, that meant we wouldn't see any cash for four solid months.

Not ok when you have rent, salaries and expenses to cover. So, I changed that. Going forward, our contracts stated that every month we required a payment of $60K. Period. No exchange of invoices and expense reports. All of that would be tallied up and submitted at the end.

Whatever you decide to do with your company, work with your accountant and find a way to make sure you can pay your contractors as quickly as possible. It's good karma for your business and it helps make sure that your company always attracts the best contractors. 

Here are three ways to help your company attract the best freelancer talent:

  1. Pay all contractors within 30 days. Want to go above and beyond? Pay your freelancers within 2 weeks. I've seen some agencies guarantee payment within 7 days. Believe me, this goes a long way in building credibility and attracting the very best talent.
  2. Update your contracts with larger clients to include a monthly retainer component.
  3. Use an cloud based system to keep track of expenses and logged hours. Tools like Tallie and Zen Payroll make it really easy for your bookkeeper to issue payment quickly and gather all the necessary info to generate an invoice.

I want to hear from you. Which of these three tips will you start implementing within your company?

Be sure to check out my free webinar with Kashoo on August 21 where I'll cover 5 Ways to Improve Your Cash Flow. Kashoo is a simple cloud accounting software that received a 4.25 out of 5 stars rating by the CPA Practice AdvisorClick here to sign up.

Danetha Doe is a cloud accounting expert. A business coach and former NFL Cheerleader, she is on a mission to bring sexy back to the world of accounting.

For weekly accounting tips, sign up for my weekly Money and Mimosas newsletter.


Want a bookkeeping program that doesn't suck?

Alright, you're ready. You're ready to take your business to the next level and upgrade your systems. Maybe you're still wearing all of the hats in your business, not quite ready to hire a bookkeeper, but anxious to get a true money game plan in place.

And you think--well, I should get a bookkeeping system. All the cool kids use it.

But, YIKES. Do they really all look like something your grandmother would use? Seriously, who even uses their CD-ROM anymore? And why isn't there an app for that?

Have no fear, my dear. There are bookkeeping programs made for the modern, and creative, entrepreneur. Programs that beautifully designed, actually intuitive and make the whole bookkeeping experience that much more delightful.

Check out my top 3 favorite programs and why I dig them.

 

  • Xero
    • An accounting software that calls themselves beautiful is top notch in my opinion.
    • Integrates with over 350 applications which makes tracking your money, expenses, time, etc. easy and seamless.
    • Voted Most Innovative Growth company in the World by Forbes
  • Wave
    • Free is the way to be. Wave doesn't charge for their bookkeeping service, only for payroll.
    • Really easy to use and well-designed.
    • Great customer service. If you ever have a question, their Twitter and Community team is right on it.
  • Freshbooks 
    • They totally believe that billing a client should be painless. I happen to agree.
    • Super fun tool and awesome team that is available for customer support.
    • Their app is available on the iPhone, iPad and Android (yay for the Android lovers!) 

Do you use any of these programs? What has been your experience? Please leave a comment below and tell me about it.

Danetha Doe is a cloud accounting expert. A business coach and former NFL Cheerleader, she is on a mission to bring sexy back to the world of accounting.

For weekly accounting tips, sign up for my weekly Money and Mimosas newsletter.