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Woodwork Biz/Getting Started #4: Special Item - Business Accounting

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Blog entry by billb posted 1280 days ago 1154 reads 1 time favorited 14 comments Add to Favorites Watch
« Part 3: Item Two - Getting the Word Out Part 4 of Woodwork Biz/Getting Started series Part 5: Item Three - Classified Ads »

I’m going to interrupt this series with an important, unlisted item. Accurate and up-to-date accounting is critical to the success of any business, including woodworking. This can be a problem if you’re like me and dislike the tedium of accounting for your business activities. I’ve always done my own accounting using Quickbooks and now my own taxes using TurboTax Online. While that has worked out fairly well, my lack of accounting knowledge means that I fail to take full advantage of the extensive capabilities of Quickbooks. Plus, my dislike for accounting causes me to put it off as long as possible. Since I have to file quarterly reports, I wind up working on my accounting like crazy just before the tax due date, not a great idea even if you like accounting.

Because of my failings in this area, I have been looking for an easy way (easy for me) to do my accounting for years, without success. At the beginning of this year I found something that really works for me and I want to share it with you.

First, if you can afford an Accountant, by all means hire one. A knowledgable Accountant can save you time and could well save you money in taxes. He or she could also save you from penalties for mistakes. I could never be an Accountant but I value the work they do.

On the other hand, if you run a one person business like me and wish to do your own accounting, my recent find might be of help to you. While I am recommending a company that I use, I am not affiliated in any way with this company nor do I gain anything if you decide to use them.

My accounting is now done by Outright.com. That’s what I said, they do my accounting and for only $10 a month. To make use of their service your business has to be formalized to some extent. That is, you can’t be mixing your personal and business funds, something you shouldn’t be doing anyway. You need to have a checking account for your business. If you make purchases with a credit card, you need a card just for your business. If you accept credit cards or paypal, you need to have those accounts solely for your business.

The way Outright.com works is that your business accounts are registered with their secure web service and they sweep information from your accounts on a daily basis. This information is categorized and formed into your account. You go into your Outright account and check on these items. They categorize but if they are unsure of an item’s category, “not sure” will be listed and you type in the correct information. From then on that expense or purchase is properly categorized automatically. You never have to post anything and you can run reports on anything you choose including sales tax, profit and loss, specific vendor information. You can also add cash and other items that may not be listed on the accounts you have registered with them. It is comprehensive and easy to understand.

Whether you are just starting out or already established and don’t already have an Accountant to handle this for you, I suggest you check it out.

-- Bill, Austin, Texas, http://woodworking-business.com



14 comments so far

View BobG's profile

BobG

172 posts in 1586 days


#1 posted 1280 days ago

I have my concerns about “cloud” storage or accounting or whatever they choose to do with it. I have had my credit card info stolen twice. The first time my card holder called and wanted to know where in England I was and why I was having something shipped to myself in Germany and another Shipped to China? At the time I was in my hometown in Arkansas.

The other time they just closed my account and sent me a new card new numbers and all. Had a note in it they did that due to “suspicious activity”!

Just food for thought!

-- BobG, Lowell, Arkansas--------My goal in life is to be the kind of person my dog thinks I am! Make more saw dust!!

View Dez's profile

Dez

1113 posts in 2702 days


#2 posted 1280 days ago

Good information Bill, thank you! I bookmarked the site and favorited this!
I to have had my Identity stolen, never from the internet and related – both times from a local concern, one a gas station and the other a local “mini-mart”.

-- Folly ever comes cloaked in opportunity!

View Nazair's profile

Nazair

43 posts in 1280 days


#3 posted 1280 days ago

You always need an accountant but for a small business you don’t need them everyday. What you can do is use a local bookkeeping service and I’m sure your accountant can recommend a few. Online services can be great but some still like the local touch when doing business.

-- Naz

View Nazair's profile

Nazair

43 posts in 1280 days


#4 posted 1280 days ago

I just checked out that website and it looks interesting.

-- Naz

View Brandon 's profile

Brandon

191 posts in 1291 days


#5 posted 1279 days ago

Great info here Bill! I’ve been following the articles and finding them to be more than useful. I’ve been using Outright for 6 months and it’s simple and down right user friendly. Thanks for the awesome info Bill.

-- An investment in knowledge pays the best interest. Benjamin Franklin

View BigTiny's profile

BigTiny

1664 posts in 1513 days


#6 posted 1279 days ago

Such a service shouldn’t need your account numbers, just the purchase information.

-- The nicer the nice, the higher the price!

View billb's profile

billb

112 posts in 1569 days


#7 posted 1279 days ago

BobG, those are definitely legitimate concerns but I believe Dez’s comment is important as his identity was stolen twice locally. In spite of all the identity theft that goes on, most of it does not happen with Internet transactions. Thieves are able to steal identities by breaking weak links. Many of those links involve unscrupulous individuals who have momentary access to your credit or debit card. It only takes moment to swipe your card and take the number and it can happen anywhere.

Let me tell you exactly how easy it is for a thief, working temporarily at any store, to get your credit card number. As a merchant, I have a merchant account to facilitate accepting credit cards. With that account I get a virtual terminal that allows me to enter card numbers into a computer to get approval on a card. I also get a portable card swipe to save me the work of filling in all that information. That card swipe can be used two ways. I normally use it connected to a USB port on my laptop. The information is taken when the card is swiped and it is sent to my merchant account company and they approve or disapprove the card in moments. But, I can also simply charge up the card swipe and take it with me to the sale location. I can then simply write a sales receipt for the customer and swipe the card into the memory of the card swipe. Then, when I get back to my office, I connect the card swipe to my computer and all the card information is transferred through my virtual terminal for approval. Or, if I was a thief, the information could simply be gathered on my computer for fraudulent use.

The credit card companies do an excellent job of protecting our information and their security requirements are stringent and the penalties for violation are harsh. Nevertheless, one dishonest person within any system can steal information. Add to that the potential loss of information caused by careless, indifferent employees and careless credit card users and it adds up to lots of identity theft. I don’t see that changing anytime soon but, in all honesty, I feel much safer making purchases on the Internet than handing my card to a waiter in a restaurant or a clerk in a store.

-- Bill, Austin, Texas, http://woodworking-business.com

View billb's profile

billb

112 posts in 1569 days


#8 posted 1279 days ago

Naz, I agree that having an accountant is a good thing, especially if your budget permits. But for some one-person businesses, every penny counts and doing it yourself can save a lot. With basic accounting software it’s not that difficult to keep track of your business. I just have a real aversion to spend the time it requires. For some it’s no problem but for me Outright was the answer. The important thing is that no matter how small the income, if you are in business accounting is essential.

-- Bill, Austin, Texas, http://woodworking-business.com

View billb's profile

billb

112 posts in 1569 days


#9 posted 1279 days ago

Brandon, that surprised me also. It is so easy to use and the reporting it is capable of is great.

-- Bill, Austin, Texas, http://woodworking-business.com

View billb's profile

billb

112 posts in 1569 days


#10 posted 1279 days ago

Big Tiny, you are right about the account numbers but they do need login and password information giving them full access to your account so you have to trust their security measures to use the service. I feel comfortable with them.

-- Bill, Austin, Texas, http://woodworking-business.com

View Derek Lyons's profile

Derek Lyons

584 posts in 2192 days


#11 posted 1279 days ago

You don’t need an accountant day-to-day, or even month-to-month… That’s what Quickbooks or a bookeeper is for. You DO need an accountant at tax time.

-- Derek, Bremerton WA --

View billb's profile

billb

112 posts in 1569 days


#12 posted 1279 days ago

Derek, I would never discourage anyone from hiring an accountant to keep their books or do their taxes. If it makes you more comfortable then that is definitely what you should do. I don’t feel that way. With the exception of one year, I have always done my taxes. The last 8 years with Turbotax and the last 4 years with TurboTax Online. In 2007 I had a complicated tax year so after I completed my taxes I had it audited by a tax preparation company and they found nothing to change. By the way, the year that I had an accountant prepare my income taxes was the year I got audited, a two hour interview followed by two unpleasant days at my shop ending up with me owing a little more than $100.00. What a relief. I don’t believe I was audited because someone else did my taxes, it was just my turn, I guess. The IRS people were not unpleasant, it was just the idea that I might owe them a bunch of money when it was over that made it seem unpleasant.

-- Bill, Austin, Texas, http://woodworking-business.com

View Derek Lyons's profile

Derek Lyons

584 posts in 2192 days


#13 posted 1278 days ago

I was just clarifying when and what you need an accountant for, if you’re looking at hiring one. I’ve seen lots of guys running small businesses that didn’t know the difference between a bookkeeper and an accountant.

We’ve used on for years, but it’s one of my wife’s ex-bosses (she’s an accountant for a business now rather than for a CPA) so we get the ‘friends and family’ rate. :)

-- Derek, Bremerton WA --

View kellylogan's profile

kellylogan

1 post in 256 days


#14 posted 256 days ago

Yes I too think one should a Proffessional Accountant to do the business ordeals and to do all the returns filing as that would be a less headache then but the thing is if your business is not a heavy transactional one then it is better to refer to some software to calculate your taxes like Turbo tax can be one which helps a lot of persons in doing their returns.

-- http://www.a2zdeals.com/coupons/Turbo-Tax/

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