Let's not dance around it: owning a small business isn't easy. You're essentially the VP of every department: business development, marketing, HR, finance, forecasting, IT and, yes, accounting and bookkeeping. Seems like an endless list, eh? Well, it sort of is. But the upside of all this responsibility is, of course, you are your own boss. You're following your passion. You're creating something. How can you not work hard for that?
Amongst all our small business-owning customers, getting finances and bookkeeping under control is often perceived as one of the most daunting tasks. But it doesn't have to be that way! All you need is the right tools. The right accounting and bookkeeping software can help you do more of that passion-following and less aimless wandering of the land of accounting.
So if you're considering Kashoo and are ready do your own bookkeeping, here's a handy list of things you need to do before getting started.
Whether you are starting a new business or getting an existing one in order , you'll start by gathering (or filing for) some general information.
Company name and address: This is the legal company name and address. You will use this internally and when sending out customer invoices.
Business number, Federal Tax ID or Employer Identification Number (EIN): In many countries you will need to register your business. The government will then issue you an identification number (along with plenty of paperwork). You'll include this identification number on your invoices.
Fiscal Year: Your fiscal year is the period used for calculating annual financial statements and is your business' reporting period.
Sales Tax Information: If your business collects sales taxes, you'll need a sales tax registration number, tax rate, required filing frequency and filing dates. Your state or provincial revenue department is where you turn for those.
Your Fiscal Year
The period of your fiscal year is critically important to your business. Most countries require businesses to report earnings and pay taxes on an annual basis. It is pretty common for this period to start on January 1st and end December 31st; however, some countries allow businesses the flexibility to to choose their own fiscal years. If you are are unsure about the particular requirements of your country, have a conversation with your accountant.
Even if you have been in business for a few years and you have shoeboxes full of receipts, it is never too late to start keeping your books. In order to make a successful transition to an accounting system you will want to gather the following:
Trial Balance: The trial balance is a compilation of your ledgers into debit and credit columns, or more simply, it is a list of the balances in your accounts. You can learn how to setup and import your trial balance into Kashoo here: Trial Balance Import
Contacts: this is simply a list of your customers and vendors. You can learn how to import your contacts into Kashoo using a spreadsheet here: Importing Contacts
Unpaid Customer Invoices: a complete list of each outstanding customer invoice and associated details, such as date and amount owing.
Unpaid Vendor Bills: a complete list of outstanding vendor bills and their associated details, such as date and amount owed.
Uncleared Checks: a list of any checks that you have written but that have not cleared the bank as of the date of your trial balance import.
The start date is simply the date that you are going to start using Kashoo. Depending on when your fiscal year starts you may want to start on that date or you can simply start part way through the year - there are no hard rules but each is a little different.
Beginning of fiscal year: if you are within a few months of your fiscal start date, that's probably the easiest and cleanest way to go.
If the beginning of your fiscal year is approaching, have all the information ready and just start the year fresh.
If you are starting a couple of months past the beginning of your fiscal year you will need to enter all of your transactions for this period into Kashoo. If it seems like too much data to enter you may want to make this your start date and record data in Kashoo going forward.
Part-way through fiscal year: if you are more than half way through the fiscal year, or simply have too much data to enter, that's absolutely OK. When picking a start date, choose one that falls on the beginning of a month, quarter or sales tax filing period. Choosing a start date in the middle of a month or tax filing period creates more work and potential issues with bank reconciliations and sale tax filings.
What happens to my data before the start date?
Choosing a start date means that any data before that time will not be found in Kashoo. But don't worry! That's OK! We always recommend to customers that they hang on to historical data. That way, when a customer from a few years back all of the sudden disputes an invoice, you've got it. Virtually every bookkeeping system will let you export all of your data. Kashoo does.
Can I import data from before my start date into Kashoo?
You are able to import your old data into Kashoo but it is not recommended unless you have a specific need. Starting with Kashoo can be a clean start, and as long as you still have access to the old data for record keeping purposes you should have all of your bases covered.
If you do need to import your old data you can follow the instructions in this article: Importing Historical Data Into Kashoo
Getting your data ready from another bookkeeping system
Before making the jump from another bookkeeping system you are going to want do a little house cleaning.
Reconcile Accounts: make sure that your bank, credit cards and other accounts have all been reconciled.
Trial Balance: you are going to want to make sure that all of your account balances are accurate before making the move. Sometimes you accountant will make some adjusting entries at the end of the year to ensure the balances are correct. Be sure to include these.
And that is all there is to it. (See! It really isn't that bad!) Keeping your own books can be incredibly empowering, give you insight into your business and help you to make better decisions. Plus, it gives you more time to tackle everything else (see HR, business development, marketing, IT...)