Choosing the Right Accounting App for a Solo Small Business
I filed for my first business tax ID almost 20 years ago. It was a web design company I called Jazzed Designs. (Retrospective LOL!)
Although I had no customers to start, I was determined to do everything ‘by-the-book’ for my first business. I spent the first month of that business doing paperwork instead of finding my first customer. About a dozen start-ups later and now I’ve learned to do the exact the opposite. Now I’ll do the first $10,000-$50,000 of revenue before I file official paperwork.
No matter if you make $10K or $100K a year, you HAVE to track your expenses. I’ve learned it’s much easier to record your expenses regularly than try to make it all up at the end of the year before you file your taxes (or worst–when you’re being audited!) The good news is tracking your expenses is EASIER than ever. Remember every expense you track reduces your income tax liability on business profits (up to 32% on personal income). If you happen to spend more money on deductible expenses than you make in income, you can 2reduce your taxes in future years.
Tracking your income & expenses goes way beyond just your taxes. As a business owner, money is a form of energy that you use every day. Tracking it will show you where the business is powered up and where it’s draining you. I recommend looking at how your income and expenses are adding up every month or quarter. I’ve heard Madonna reviews her income and expenses every day.
I hated looking at my finances unless the numbers were “good”. If that’s you, get a financial advisor or manager who will make you engage with your numbers. I learned (the hard way) that the difference between a business and a hobby is money. I needed to engage with my money with as much attention as I engaged with my clients.
What to Look For in a Small Business Accounting App
Picking a great accounting App from the start can make all the difference. I once tried to switch our accounting services at Women Grow with an under-qualified CFO. We spent 6 months trying to switch and didn’t have any reliable financial information to make decisions on in the mean time. It was a disaster. Use the hints below to look for an accounting solution that will grow with you.
3 Questions to Ask Before you Commit to An Accounting App
How long has the company producing the App been in business? — I LOVE trying new stuff but not when it comes to accounting. Brand new Apps may disappear as quickly as they launched so look for something with history.
How can I export my data? — You are required to keep your financial records for 7 years in case of an IRS audit. As I’m preparing my taxes, I export all of my data into reports that I can save as PDFs or CSVs. This way if I no longer pay for the App, I still have access to all my records. Make sure to export your files in the most common file type available so you’re not stuck trying to open something weird in 7 years.
How does this App save me time? — Look for features like being able to automatically import all your transactions from your business bank account and credit card. If you send invoices, will this App allow your customers to pay with a credit card or ACH? If you have subscription-based services, can it automatically charge someone monthly?
The Best Apps to Track $1,000 to $500,000 in Small Business Expenses
Here are the three options I’ve used personally for different size businesses…
Expensify: I used Expensify to track expenses for FREE for over a decade. Originally created to make it easier to make expense reports, you can now also send invoices, pay bills, and track mileage. This is my recommendation for the very first stage of your business where you have a lot of expenses and aren’t totally sure what your main income sources will be.
Fiverr Workspace: I’ve been using Fiverr workspace for about 18 months to run my teaching & consulting business. This App is built for creatives who make work-for-hire and includes everything you need to run that business. They bought their contract language for the Freelancer’s Union and it’s the best legal contract I’ve ever used for creative freelancing. It helps me categorize all my income and expenses from every online source imaginable.
Quickbooks: If your business has multiple owners, multiple employees, or the need to track a physical inventory…you will probably want to try Quickbooks. My experiences with Quickbooks have been neutral but the good thing is its the most commonly used small business accounting software so it’s easy to get help when you need it.
Drop your questions in the comments and let me know which way you went.
Full discloser I may make $20 if you subscribe to Fiverr Workspace using this link.
