Archive of ‘Bookkeeping’ category

Is Xero Right for Your Business?

| Bookkeeping, Small Business

Is Xero Right for Your Business?

Xero believes in giving you — the small business owner — the power to plan ahead with your finances.

And truth to be told, I’m completely biased. (I liked the software so much I became a Xero-certified bookkeeper!)

If you’re in the market for software, consider Xero and then check out WaveApps, Zoho, Kashoo, and Freshbooks, too.

Overview of Xero

Xero is a robust accounting software that entrepreneurs can use by paying a monthly subscription between $9 and $70. It’s cloud-based, which means that it’s online and all of your information is kept on the Internet as opposed to your computer.

Is it easy to learn?

Since Xero is so robust, it’s not the easiest of software to get up and running. In fact, I recommend that you use it with a professional accountant or bookkeeper. If you’re looking for accounting software that’s free and easier to learn, check out WaveApps.

That being said, it can be easily navigated once your accountant or bookkeeper is keeping everything organized. You’ll be able to see your cashflow in real time, which allows you to make smart financial decisions, check reports to see if you’re on track with your revenue goals and send beautiful quotes to potential clients.

What are the downsides?

There are a few downsides to using Xero as a small business owner, and I’m going to break them down into three categories: limited multicurrency options, no recurring billing, and accounting jargon.

1) Limited multicurrency option – Unless you choose the most expensive subscription ($70/month), you won’t be able to receive or invoice using foreign currency, which makes doing business with people outside of your country really difficult. So if you’re a solopreneur who needs under 5 invoices but needs multicurrency, you still have to choose the most expensive option.

2) No recurring billing – If you’re invoicing many different clients the same amount each month, you don’t have the option to charge their cards automatically. While Xero will duplicate the previous month’s invoice and send it, the client will still have to enter their credit card information to pay it.

3) Accountant jargon – This software, like many of the others on the market, is made with accountants and bookkeepers in mind. That means that a lot of the feature I love about it (old-school style, journal-based bookkeeping) are things that won’t matter much to you. It also means that you’ll have a more difficult time navigating the software and being able to make the most of its features. It’s best used with a professional.

Why should I use it?

1) Better than a spreadsheet – While Xero isn’t perfect, it’s also a major step up from spreadsheet-style bookkeeping. That means tax time will be easier to manage because everything has already been captured and recorded.

2) Easily accessible and useful reports – The reports are one of my favorite features of Xero.

3) Constant updates and great customer service – Xero knows the value of listening to its customers. As a result, they’re always rolling out new features, fixing technical bugs, and generally making the software more beautiful and easier to use. Plus, if you do encounter problems, the customer service is fast and at your disposal 24/7 for free. They’ll get back to you almost immediately and explain how to solve whatever problem you’re facing with patience.

4) Openly available information – While this software is made for accountants and bookkeepers, Xero still offers a lot of information for the DIY entrepreneur. You can find tutorials in dedicated training, articles, videos, and their handy-dandy accounting glossary.

5) Able to track inventory – This is a built-in feature that’s great for business owners who sell physical products, like t-shirts.

Quick rundown of Xero

  • Started doing business in: 2006
  • Based in: New Zealand
  • Cost: Paid monthly subscription ($9 – $70)
  • Free trial: 30 days
    Credit card processing fees (via Stripe): %2.9 + 30 cents
  • Automatic billing: No
  • Payroll available: Yes (includes features like built-in timesheets, employee leave, and reimbursement of expenses)
  • Multicurrency: Yes
  • PayPal payment option: Yes
  • Etsy connection: No (only through 3rd party applications)
  • Shoeboxed connection: Yes
  • Freshbooks connection: No
  • Customized invoices: Yes
  • Mobile app: Yes (There are separate apps for Invoices / Receipts / Payroll)
  • Option to collaborate with team members: Yes

Still have questions about whether or not Xero is right for you? Leave a comment below or send me a message.

Comments Off on Is Xero Right for Your Business?

Is WaveApps Right for Your Business?

| Bookkeeping, Finances, Small Business

Is WaveApps Right for Your Business?

So you’ve heard of WaveApps, the accounting software, and now you’re wondering what all of the fuss is about. Is it really comparable to other software like Xero, Freshbooks, or Zoho?

And, as a small business owner, how is it going to make your life easier, if at all?

Before I tell you about WaveApps, I want to remind you that no software is perfect and that many of the suggestions I give are going to be made for accountants and bookkeepers. So they take time to learn.

What’s most important is that you choose one that fits for the size of your business and the type of work you do.

Also, any cloud-based software you choose is going to be a step up from the standard spreadsheet-style bookkeeping.

Overview of WaveApps

WaveApps is free accounting software. It’s cloud-based, which means that it’s online and all of your information is kept on the Internet as opposed to your computer.

It’s free (no, really) and was made primarily for small business owners, consultants, and freelancers. While that price tag can be very kind to your bank account, it also means that you give up features that other software, like Xero or Freshbooks, provide. You’ll see these in the section below about the downsides.

Is it easy to learn?

Yep, Wave is one of the easiest cloud-based software to learn. When you sign up for an account, you’ll be prompted to connect your bank accounts (including PayPal) and credit cards. It works even if you have international bank connections or use a foreign currency.

After connecting your accounts, you’ll be able to track your income and expenses, send invoices, and read reports to see a bigger picture of your money.

You can access reports for:

  • Financial – Balance Sheet and Income Statement
  • Taxes – Sales Tax and Payroll Wage (paid feature) and Tax Report
  • Customer – Income by Customer and Aged Receivables (how much money is coming in and how long you’ve been waiting for it)
  • Vendors – Expense by Vendor and Aged Payables (which expenses you haven’t paid yet and how long overdue they are)
  • Other – General Ledger (similar to a general overview all of your accounts), Account Transactions, Trial Balance (can see all account balances), Gain / Loss on Foreign Currency Exchange

You can customize all of the reports by date.

What are the downsides?

There are a few downsides to using WaveApps as a small business owner, and I’m going to break them down into three categories: accountant jargon, technical bugs, and Etsy sales.

1) Accountant jargon – To be fair, Wave does a great job of always trying to make things easier for small business owners who aren’t accountants. That being said, there is still a lot of jargon that an entrepreneur would have to learn to be able to make the most of the software. What’s more, if you’re not familiar with how your books should be kept, you often won’t know if there’s a bug or if something isn’t being properly recorded. Mishaps like that could lead to you paying more than you owe in taxes or making decisions based on false information.

2) Technical Bugs – Since it’s a free software, identifying and fixing technical bugs takes a bit longer (2+ days). What do I mean by technical bugs? One I encounter regularly goes like this. Let’s say your balance sheet says there is $100 in your bank account. But when you go to the Transactions screen, you have $90. You then go check the balance of your account, and it’s also $90. That means that somewhere in all your transactions, there’s a mystery $10 difference. In other words, you have a “ghost transaction” that you now have to sift through and find. Even as a trained bookkeeper, transactions like these can take me 1-2 hours to find. Not the best way to spend your Wednesday, right?  

3) Etsy Sales – If you sell on Etsy, you’re able to collect sales through Wave, which is great. However, since you’re also connected to PayPal, those sales will be recorded twice. That means your sales numbers will be misleading unless you go through and manually merge the two transactions. That’s also a time suck.

Why should I use it?

1) Better than a spreadsheet – While Wave isn’t perfect, it’s also a major step up from spreadsheet-style bookkeeping. That means tax time will be easier to manage because everything has already been captured and recorded.

2) Free and easy to set up – It’s free and setup is painless, which is great for any entrepreneur who is bootstrapping her business. That being said, it also allows room for growth by giving you the option to invite your accountant, bookkeeper, or team member into the software.

3) Responsive customer service – The customer service is really responsive and attentive. If you’re confused about why your numbers are wrong or how to get rid of duplicate transactions, you can open up a chat box from directly within the software and be connected to someone.

4) Easy to learn – Much of the software, like looking at transactions and invoicing, is going to feel intuitive if you’re tech savvy. If you encounter something tricky or want to learn how to use the software to its fullest potential, there is plenty of information available. You can start with a free series of articles called Wave University.

5) Multicurrency option – With most accounting software, multicurrency is either unavailable or an add-on for a higher-priced subscription. WIth Wave, though, you can invoice and receive funds in any currency, which makes it a lot easier to do business with clients abroad without worrying about the exchange rate.

6) Can save credit card information of clients – Clients can choose to save their credit card information so that each time you invoice them, all they have to do is click “Pay Invoice.”

Quick rundown of WaveApps

  • Started doing business in: 2010
  • Based in: Toronto, Canada
  • Cost: Free
  • Credit card processing fees: %2.9 + 30 cents (varies for non-Canadian / non-US countries)
  • Automatic billing: No
  • Payroll available: Yes ($15 + $4 per employee in the US)
  • Multicurrency: Yes
  • PayPal payment option: No
  • Etsy connection: Yes
  • Shoeboxed connection: Yes
  • Freshbooks connection: No
  • Customized invoices: Yes
  • Mobile app: Yes
  • Option to collaborate with team members: Yes

Still have questions about whether or not Wave is right for you? Leave a comment below or send me a message.

1 Comment

Why Entrepreneurs Should Stop Using Spreadsheets for Bookkeeping

| Bookkeeping, Business Basics, Small Business

Why Entrepreneurs Should Stop Using Spreadsheets for Bookkeeping

If you’re still using a spreadsheet for your business’ bookkeeping, we need to have a heart to heart.

I’m guessing that if you’re still using them, it’s either because:

A) You don’t know other options.

B) You can’t choose between the other options.

But here’s the problem. When you use a spreadsheet, bookkeeping has a tendency to take over the important stuff that keeps your business running, like bringing in new sources of revenue or marketing.

Here’s what I believe: bookkeeping should NOT take over your business tasks.

I know this isn’t news to you. Your spreadsheet has been clunky, constantly out of date, and often difficult for you to understand.

And when you don’t understand what you’re seeing, making smart financial decisions becomes a whole lot more difficult and making realistic goals feels impossible.

So what should you do instead?

That’s why the next best move for your business is to choose and sign up for a cloud-based accounting software.

I know that sounds kind of intimidating. But really, depending on which one you choose, the transition can be smooth, and you’re going to LOVE all the time you save.

Let me make the difference between a spreadsheet and online accounting software clearer by talking about something we all love: food.

When you cut a carrot, you can use a knife and cut one slice at a time. It will take a bit of time (especially if you AREN’T Gordon Ramsey).

Or your other option is to invest in a food processor, which will cut your carrot into little pieces in seconds.

The food processor is like your accounting tools, it gets the job done faster and more efficiently. Plus, you were probably able to chop more carrots in the same amount of time.

Remember, no software is perfect

As a bookkeeper, I see accounting software in a different light, and I read a lot of comments that look something like this, “I hate XYZ software. It’s so confusing and so hard to use. I want to find a new one. Any suggestions?”

I want to make sure you know that no software is perfect and that many of the suggestions I give are going to be made for accountants and bookkeepers, so they take the time to learn. What’s most important is that you choose one that fits the size of your business and the type of work you do.

Also, any cloud-based software you choose is going to be a step up from the standard spreadsheet-style bookkeeping.

I know that making the decision to move from spreadsheet to online can feel like a lot of work, so I’m going to go over my favorite accounting tools that help me and my clients with bookkeeping tasks.

These are:

  • Xero
  • Zoho Books
  • WaveApps
  • Freshbooks
  • Kashoo

These tools will help you streamline your business when it comes to sending invoices, accepting payments, tracking income and expenses, and managing your cashflow among so many other benefits.

We’ll talk about who each software is most suited for, the cost, benefits, and disadvantages.

Each requires a different process for making the move from a spreadsheet (or paper and pen) to online bookkeeping, and I love them because they all have a fantastic library of resources and responsive customer service. So, no matter which you choose, they’ll take care of you. 🙂

If you have questions you definitely want me to address or a specific software that you’ve been thinking about, leave me a comment below so I can make sure to cover it.

 

 

Comments Off on Why Entrepreneurs Should Stop Using Spreadsheets for Bookkeeping

Take Control of Your Finances: Training

| Bookkeeping, Budget, Finances, Personal, Small Business, Tutorial

Congratulations!

You’ve made it to the final step of taking control of your finances! If I could, I would definitely give you a big hug (I was going to say pop a bottle of champagne, but alcohol is usually one of the things people can trim).

If you’ve been following along, you’ve done the first three steps in the process of finding financial prosperity:

  1. Tracking
  2. Targeting
  3. Trimming

Now we can move onto the last step: Training.

Now that you know where your money goes, what your financial goals are, and how you’re going to get yourself there, it’s important to keep up the work.

It’s so easy to be tempted to go back to your old ways. But, unlike the proverb suggests, you can absolutely teach an old dog new tricks.

Treat it like going to the gym to maintain your physical health. You want to do the same and keep up your financial health.

Let’s discuss ways to maintain your financial fitness.

How to Maintain Financial Fitness

There are a number of ways to do this, and I think the simplest one is to keep learning.

Read financial books, watch videos, or even hire a bookkeeper (like me!).

By reading about financial matters in books and articles online and by continuing to keep up with your finances, you can make it a part of your everyday life and make it easier to maintain.

Financial health is a lifelong process and one you should continue to keep up.

Most importantly, think about paying it forward. Don’t keep your newfound financial knowledge to yourself!

Teach your kids, neighbors, or coworkers about finances. Make recommendations to others on how to get more information regarding money and how you got your finances in order.

For example, in my house, I teach my kids the value of money by opening their own savings accounts.

They have to decide how much to save and when they want to buy something they have to count their money to see if they can afford it.

Resources Recommendations

Here are some resource recommendations:

Books

Websites

Facebook Groups

Podcasts

Money Coach

Bookkeeper

If you get stuck, I’m here to help. You can ask me questions directly on my Facebook page. 

Keep up the good work!

Comments Off on Take Control of Your Finances: Training

How to Close Your Books: “Zero” Temporary Accounts

| Bookkeeping, Small Business

How to Close Your Books: “Zero” Temporary Accounts
In our final part of the How to Close Your Books series, you’ll learn how to “zero” temporary accounts. What are those? Temporary accounts include expenses, contra-expenses, gains, revenue, contra-revenue, and losses. (“Contra” means opposite, so for example, a contra-revenue account would include Refunds and Discounts.) These accounts get set back to zero for the new year.

This way, reports prepared will only have data for the current year. The amounts are totaled together and are either debited or credited to the Owner’s Equity account. Below, you’ll see an example. We’ll close out the expense accounts and sales accounts using the numbers from your trial balance.

TRIAL BALANCE
Account Debit Credit
Bank Checking 1000
Paypal 2050
Accounts Receivable 0
Advertising 520
Delivery 1580
Insurance 6540
Purchases 8740
Telephone 520
Rent 12000
Utilities 6580
Other Expense 0
Credit Card 65214
Accounts Payable 0
Sales Tax 37500
Sales 250413
Owner Investment 0
Owner Withdrawals 0
Owner’s Equity 0

1) Add amount of expenses

Add up the amounts in the expenses account, and mark it in the debit column.

2) Add amount of sales

3) Subtract

Add up the amounts in the sales account, and mark it in the credit column.

Subtract the smaller number from the big number. If there is more credit, then that is positive Net Income, whereas if there were more debit, that is a Net Loss. Whatever the case, the debit goes to the debit column for Owner’s Equity and the credit goes to the credit column of Owners Equity.

Total Debit Credit
 Step 1 36480
Step 2 250413
Step 3   213933

 

Adjusted TRIAL BALANCE
Account Debit Credit
Bank Checking 1000
Paypal 2050
Accounts Receivable 0
Advertising 0
Delivery 0
Insurance 0
Purchases 0
Telephone 0
Rent 0
Utilities 0
Other Expense 0
Credit Card 65214
Accounts Payable 0
Sales Tax 37500
Sales
Owner Investment 0
Owner Withdrawals 0
Owner’s Equity 213933


How do you do that online?

Lucky for us Xero and Wave do this automatically! This step is completely internal and if you don’t believe me, go check out a Balance Sheet report for Dec 31, 201X and compare the report for Jan 1, 201X and you should notice that the Owner’s Equity account has changed and all temporary accounts, like expenses and sales, are now ZERO.

You have now successfully closed out your accounts!

Congratulations. This means you’re ready to start the new year off right. You now know how to track your expenses and invoices and perhaps do them at least once a month to keep on top of them. But even if you leave it until the end of the year, you now know what you need to do to close out your books for the year. Thank you for following along!

If you want to get the full guide on How to Close Your Books for the year in one handy PDF, sign up below.



 

Comments Off on How to Close Your Books: “Zero” Temporary Accounts

How to Close Your Books: Trial Balances

| Bookkeeping, Business, Finances, Small Business, Tutorial

How to Close Your Books: Trial Balances

In this next post in the How to Close Your Books Series, we’re going to make sure all of your accounts balance. Once you know that, you can prepare your taxes or send the files to an accountant who can prepare your taxes for you.

Before we start, make sure all of your expenses and invoices are entered. See the corresponding tutorials and do that work before moving ahead. You’ll then need to have all of the bank reconciliations done and ensure that any missing transactions are added. Once you have all that complete, you can start your trial balance as you’ll need to reference the master spreadsheet to get these numbers.

Write down all the accounts in order

Write down all the accounts in order of

1) Assets

2) Expenses

3) Liabilities

4) Revenues

5) Equity

You’ll do this for each of your accounts (bank checking, PayPal, etc.), and it can be alphabetical if needed. Usually, these accounts are assigned numbers in accounting software. For example, Assets will have 1000-1999, Liabilities 2000-2999, Equity 3000-3999, Revenues 4000-4999, Expenses 6000-6999. You may want to implement a similar numbering system for your spreadsheet as it makes it easier to find an account if a new bookkeeper is looking things over.

What are assets, expenses, liabilities, revenues, and equity?

Assets are things of value that are owned by your company. For example, cash accounts, accounts receivables, any land, equipment, or inventory. Your expenses are the costs associated with doing business such as advertising, materials, fees, etc. Your liabilities are obligations to pay later. For example, credit cards, any bank loans, or personal loans.

Revenues are any fees earned from providing services and the amounts of merchandise sold. An example of this are sales of products or consulting/coaching revenue. Equity is the amount of ownership or profit in a company. For example, the owner’s equity in a Sole Proprietorship refers to the amount of profit at year end.

You should have these numbers from your totals throughout the year, as you’ve gone through and added your expenses, invoices and then reconciled your bank accounts. Take the totals of each account from the spreadsheet and add them in the proper column like in the example below, with debits on the left and credits on the right.

There is a rule of thumb, if every account is positive, then the balances will go in the respective debit or credit column. Assets and Expenses are in normal/positive DEBIT balance and Revenues, Liabilities and Equity are in normal/positive CREDIT Balance.

To make it easy, I have the spreadsheet calculate account Totals per month, per account, and then a Grand Total for the Year.


Want the tutorial of how to close your books in one easy-to-use PDF with free spreadsheet templates? Click here to access my Bookkeeping Resources library to get the entire How to Close Your Books series as a PDF.


Example:

TRIAL BALANCE
Account Debit Credit
Bank Checking 0.0
Paypal 0.0
Accounts Receivable 0.0
Advertising 0.0
Delivery 0.0
Insurance 0.0
Purchases 0.0
Telephone 0.0
Rent 0.0
Utilities 0.0
Other Expense 0.0
Credit Card 0.0
Accounts Payable 0.0
Sales Tax 0.0
Sales 0.0
Owner Investment 0.0
Owner Withdrawals 0.0
Owner’s Equity 0.0

 

For online accounting software Once you have this done, you’ll use these numbers for your taxes, and if necessary, a Balance Sheet and Income Statement.

Trial Balances are all done automatically. Software is set up for double entry bookkeeping and makes the user enter amounts only once unless there is a manual journey but even then the system won’t let you save it until your Debits equal Credits.

For Xero

Go to Reports >> All Reports >> Detailed Reports >> click on Trial Balance. You can publish the report, which means that the report is saved with those particular numbers and can be printed or exported.

For Wave

Go to Reports >> Trial Balance. You can also export this to Excel, CSV or PDF.


If you want to get the full guide on How to Close Your Books for the year in one handy PDF, sign up below.

 

Comments Off on How to Close Your Books: Trial Balances

How to Close Your Books: Invoices

| Bookkeeping

invoices_coverContinuing along with our series on closing your books to get your business finances in order for the new year, today we’re going to talk about invoices. Let’s dive right in.

When you take in money as a business, you may not necessarily record the transaction as an invoice, but it’s helpful to think about it that way.

Whenever you receive money, you need to record it. Even if you don’t have an accounting program or software, you need to mark it down and have some type of receipt of payment.

For example, if you use a Square reader, it sends a receipt of payment and captures the information about that sale. And while you have this information within Square, you still need to organize and document every last penny you have received throughout the year.

Step 1: Gather your invoices

This includes any time you receive income throughout the year. Again, start at the beginning of the year, and take it one month at a time.

Step 2: Set up your spreadsheet

Since you may not have an accounting program or software set up, I’m going to show you how to do this manually within an Excel spreadsheet.

Using the same spreadsheet I introduced in the Expenses post, fill in the fields under the Income columns.

To get access to the spreadsheet template, click here to access the free Bookkeeping Resources library.

Step 3: Enter your invoices

Starting with your first sale from the year, enter the information needed to the columns of the spreadsheet.

  • Date – Enter the date of the sale when the purchase occurred.
  • Description – Enter what you sold.
  • Reference – Enter your own invoice number here. If you haven’t numbered your orders or sales, you can start by saying your first sale of the year is 001 and continue on down the line. You want to do this with all of your orders whether they’re from Etsy, Big Cartel, so on and so forth.
  • Bank Account, Debit or Credit – Record the debit to your bank account or a credit to your account if you’ve sent an invoice but have not been paid for that invoice yet.
  • Sales – You may want to split this column up for the different sources of income. E.g.  Etsy sales, consulting sales, BigCartel or in person, craft fair sales. This can help you see where your most volume of sales are from and where the most money is made. This is great information to have for tracking purposes and to help grow your business.
  • Tax – Did you charge tax and how much did you collect?
    • In Canada, you should be collecting GST if you have over 30,000 gross revenue.
    • In the U.S., you should be collecting Sales tax in the state you are located when doing in-person sales. Online you only need to collect sales tax if you sell to a person who resides in a state where you have a physical location.

Once you’ve filled out these columns for your first invoice, you need to repeat the process for all of your income from the fiscal year until all of your invoices are accounted for. Everything from the year goes into the same spreadsheet.

Take it slow, and go one month at a time.

But what about online systems? How do you enter your invoices?

The good news is, if you want to set up an accounting system or start using accounting software, you can still do so. You may have started this last week with your expenses, so you should be able to piggyback off of what you’ve already entered and continue by entering your invoices.

For an online system like Xero:

Xero has an invoice template which makes it easy to import all of those sales you wrote up in a spreadsheet. It’s a little more work because each invoice needs to be matched with a payment and then reconciled with the corresponding bank transaction. You can make invoices for cash sales and match the payments to your petty cash account.

For an online system like Wave:

Unfortunately, you can only create invoices within Wave and not import them from a spreadsheet. Once made, you can match a transaction to the invoice with the “create invoice payment” function.

For an online system like Freshbooks:

Another easy to use software is Freshbooks, but it’s something to set up for next year. Freshbooks is great for businesses who don’t want a fully functional accounting system but who need to get paid easily. A neat feature of Freshbooks is the capability to send recurring payments. Set up a profile, and see the money come in automatically!

Once all your invoices are in for the year, congratulate yourself on a job well done. You’re almost done closing out your books for the year!

In the next step, I go over how to reconcile your accounts.

If you want to get the full guide on How to Close Your Books for the year in one handy PDF, sign up below.



Comments Off on How to Close Your Books: Invoices

How to Close Your Books: Expenses

| Bookkeeping, Business, Finances, Small Business, Tutorial

How to Close Your Books: Expenses

In the introduction of how to close your books, I talked about the importance of closing out and reconciling your business accounts for the start of the new fiscal year and why you need to do so.

In this post, I’ll be discussing step by step how to document your expenses from the current fiscal year and how to prepare them for the end of year wrap up. Let’s get started.

Step 1: Gather your expenses

Gather your expenses from this current fiscal year. We’ll be starting at the beginning of the year with your expenses from January.

Step 2: Set up your spreadsheet

Since not everyone has accounting software or perhaps has not kept up to date with their software throughout the year, I’m going to show you how to do this by hand, or at least in an Excel spreadsheet.

Create a new spreadsheet and include the following columns:

Date | Description | Reference | Source | Bank Account Dr, Cr | Category | GST Paid (or Sales Tax Paid)

I’ve made a sample spreadsheet for you to use and customize for your expenses, which you can access for free by signing up to the Bookkeeping Resources library and downloading the full How to Close Your Books PDF.

Step 3: Enter your expenses

Take a receipt and fill in the columns with the information from the receipt, fill out all the columns:

  • Date – Enter the date of the receipt when the purchase occurred.
  • Description – Enter the name of the company you purchased from. For example, if you purchased Facebook ads, you’ll record it as “Facebook.”
  • Reference – Here you want to record a purchase order number or invoice number that the receipt references. If you don’t have one, it’s ok to leave this field blank.
  • Source –  For this field, record where the money came out of. Was it your bank account, checkbook, PayPal, etc?

You should have a reference or a source per expense. You don’t need both, but you do need one or the other.

  • Bank Account, Debit or Credit – Here you want to record the amount of money that was debited from your bank account and/or credited to another account. I explain the different between these two options in my two previous posts What The Heck Is A Debit Anyway? and Credit- Love It Or Hate It
  • Categories – Here you want to record the type of expense. Was it advertising, shipping, bank fees? There are many expense categories to choose from.
  • GST Paid – Here you want to enter the tax you paid on your expense. In Canada, there are two taxes, so you may want to have two columns one for GST and one for Provincial tax. In the U.S., you can record the sales tax you paid on the expense, if any.

Once you’ve filled out these columns for the first expense, you need to repeat the process for all of your receipts from the fiscal year until all of your receipts are accounted for. Everything from the year goes into the same spreadsheet. Take it slow and go one month at a time.

But what about online systems? How do you enter expenses?

The good news is, if you want to set up an accounting system or start using accounting software, you can still do so.

For an online system like Xero:

Create an account with Receipt Bank and send all of your receipts virtually. Most of our receipts these days come into our email and Receipt Bank allows you to forward your receipts to a unique email just for you. You can even take a picture of your receipt, if you have one from a cash purchase with an app (available on both Apple and Android), and it will send it to your account automatically.

Receipt Bank takes care of scanning the receipt and gets it ready to publish to Xero. Once you’ve checked your receipts for accuracy and they’re set to the right expense account, you can set the program to automatically send receipts to Xero. It will even allow you to export your expenses as an Excel Spreadsheet or to PDF.

For an online system like Wave:

Shoeboxed is another system that takes care of receipts. It will scan your receipts and get them ready for export into Wave. With a click of a few buttons, you can watch all of your receipts turn into transactions inside Wave. It will even allow you to export your expenses as an Excel Spreadsheet, CSV, or PDF.

Once all your expenses are in for the year pat yourself on the back and treat yourself to a glass of wine because that was a lot of work!

And now that you know how to record your expenses, maybe next year you’ll do it year round so you won’t have to do it all in one go.

In part three of how to close your books, I’ll go over how to enter your invoices from the year. So come prepared with at least your first three months of invoices. 

If you want to get the full guide on How to Close Your Books for the year in one handy PDF, sign up below.



Comments Off on How to Close Your Books: Expenses

How to Close Your Books: Introduction

| Bookkeeping, Business, Finances, Small Business, Tutorial

How to Close Your Books: Introduction

It’s almost time to ring in the new year but before we pop open the champagne, there’s a lot to do to close out your books for the year. There’s expenses, invoices and bank accounts to reconcile. So hold on to those champagne flutes and party hats. You’ll first need to get yourself organized.

If you start now, you won’t feel rushed or overwhelmed come the ringing in the new year. You’ll even save yourself the headache of scrambling to do the work at tax time.

Remember, tax filings in Canada are due June 15, though you have to pay your dues by April 30th. In the U.S., you’ll need to file by April 15th. And while those filing deadlines may seem like a long ways away, they always come sooner rather than later. I don’t want you to be stressed when they do! 

At the end of the fiscal year, you need to close out the business year to get ready for tax time as well as close out your accounts for the year. Most likely your fiscal year for your business follows the calendar year, so it’s best to start now before the year is over. All of your accounts have to be reconciled. You’ll want to know how much money you made and your expenses for the year. This information will all go into your tax returns, as well.


Want the tutorial of how to close your books in one easy-to-use PDF with free spreadsheet templates? Click here to access my Bookkeeping Resources library to get the entire How to Close Your Books series as a PDF.


You’ll also want to reconcile all of your “temporary” accounts (accounts like Sales, Expenses and Draws) so they are set to zero for the new fiscal year. When you close out and reconcile these accounts, it allows you to compare how much you made and spent during the year. This information is very helpful for year-to-year comparisons, too. It will help show you how financially stable your business is, how much you have to invest back into your business, or how much harder you have to work in the new year to grow your business. When you know this information, putting together a plan to get to that six-figure mark (or over it!) becomes a whole lot more tangible.

Over the next couple of weeks, I’ll show you how to close out your accounts for the year and help you get ready for tax time. I’ll discuss the specifics of expenses, invoices, and reconciliation of your accounts.

To get started, you’ll need to start gathering your expenses and invoices over the past year. You’ll also need to look at your business bank accounts including PayPal, Square, or the like. We’ll take it slow and I’ll show you how to go through one month at a time so you won’t be overwhelmed.

Next week we’ll start looking at your expenses. If you haven’t kept up with your bookkeeping throughout the year, or haven’t started, you’ll be just fine. Don’t fret. I’ll show you how you can get your finances in order. So to be prepared, gather your expenses for the first three months of the year. I’ll explain how to deal with them and get you started on the rest of the year’s expenses.

Get access to my Bookkeeping Resources library by signing up below.



Comments Off on How to Close Your Books: Introduction

Money On The Move

| Bookkeeping, Business, Finances, Small Business

LS_BLOGPOSTIMAGEThis is a guest post written by Jamie Dalzell

The way we manage our money has changed a lot in recent years, thanks in no small part to those smartphones we just can’t seem to put down! More and more people are deciding to ditch the tired way of doing things, seeking out specialised advice – such as the excellent bookkeeping services Lisa provides – and taking more responsibility for the everyday management, tracking and upkeep of their accounts.

Cash registers and tills? They may as well be in a museum! Customers, and small business owners, now expect to be able to pay for things when they want, however they want, wherever they are. Deciding on the right accounting team, or the right VA is still an important decision, but nowadays your choice in Apps and software packages is just as crucial.

Need some help in the decision making process? Today we’re taking a look at some of the latest and greatest apps, software and hardware. Providing you with some suggestions for managing your money on the move. So whether you’re looking to accept payments, create invoices or manage your accounts, there’s a solution here for you!

Money Managing Opportunities

Whether you’re using an iPhone or an Android device, there’s an app available for every scenario.

1. Mint

With Mint you can manage your earnings, as well as track your expenses and spending. An important aspect of budgeting for your business. Syncing to all of your accounts, it also analyses your spending habits, making it easy to pinpoint possible savings. You can also set up balance alerts, and Mint will email or text you when they’re triggered.

2. HomeBudget

HomeBudget is great for those working from home who want the ability to manage house and business finances from the one place. It helps you separate home and business expenses – enabling you to transition from hobby to business much more effectively – and the search functionality makes tracking payments that much easier.

3. Invoice2Go

Invoice2Go is perfect if, like other small business owners, you wear multiple hats. With the ability to create and manage invoices on the go, it also lets you pull up past invoices for easy reference. Better yet? Its report feature lets you see at a glance how much you’re bringing in over the next 15, 30, 60 and 90 days.

4. Currency

Asked for a quote from an overseas customer while you’re on the move? Currency is a currency converter that uses real-time exchange rates. It’s the perfect way to ensure you have accurate information to hand at all times.

5. Expensify

Expensify helps you track your growing pile of receipts. Simply take a pic of a receipt and it’ll turn it into an easy-to-read expense report. And at click of a button, you can send that off to your accounting team.

Hardware? Hardly An Issue

When it comes to accepting payments? The hardware required isn’t nearly as bulky, cumbersome – or expensive – as it once was. There are multiple options available to you!

1. Banks A Lot

Banks themselves now offer a wide variety of mobile EFTPOS and Credit Card devices, which can be tethered to your smartphone and function alongside their apps to accept payments on the go. Pricing and availability of these vary, with institutions like the Auckland Savings Bank in New Zealand and the Bank of America in the US each offering their own packages.

2. All In One

A number of software and app providers also offer their own solutions. The advantage here is that these integrate directly with their accounting software and existing apps, while there are also a number of ways to integrate your accounting software and website yourself!

Social (Spending) Networks

If recent developments are anything to go by, social networks may just be the next frontier for payments on the go!
Businesses like Square have been providing mobile payment options for years. Their most recent feature? The introduction of $cashtags. Like Twitter’s #hashtags, only wealthier. With these, your business can accept payments via a customisable $cashtag that can be shared online and off.

Other networks are jumping aboard too. Facebook’s Messenger and Snapchat’s Snapcash have both introduced money transfer options to their respective networks. While these are mostly used for paying friends and family, it’s easy to imagine a future where customers are paying for products directly within social networks themselves.

Have we missed an app that you use to manage your money? Have you used a $cashtag or sent money via Facebook? We’d love to hear from you!

// Jamie Dalzell \\

I’m an experienced freelance writer with a background in web and print media covering all aspects of the videogame industry.

My interests also extend beyond the screen, and I enjoy bringing unique, informative content to sites on a variety of subjects.

Comments Off on Money On The Move

1 2 3 4

© COPYRIGHT LISA SAVAGE BOOKKEEPING   SITE DESIGN BY GINA PALHA