Small Business Doer

Overpayment of Vendor Bill – How to Handle in Quickbooks

Greg Lam — Thu, 26 Apr 2012 06:28:09 +0000

You overpaid a bill or bills that were sent to you by one of your vendors, so how do you handle this bill overpayment in QuickBooks?

The first step in QuickBooks is to overpay the bill and get a credit. The second step is to either get a refund from the vendor and enter it as a deposit or use the overpayment credit on a another bill you received from the vendor.

Step 1 – Overpay the bill(s)

Go to Pay Bills (vendor > pay bills)
Select the appropriate bill(s) that you overpaid (by putting a check mark next to the bill)
In the Amt. to Pay column, add the overpayment amount to a bill that you will be paying
Continue as usual and pay selected bills

What this overpayment will do is create a credit with the vendor that you can use when paying another bill.

Step 2 – Receive the credit as a refund

If you will not purchase anything further from the vendor,v you can request a refund. You have to physically contact the person yourself and get the company to give you a refund.

If you will use the credit to pay another bill, skip to step 3.

When / if you get the refund, this is what you do.

Go to Record Deposits (banking > make deposits)
For the Received From choose the vendor’s name and the From Account choose Accounts Payable
Receive the payment

This effectively creates a bill from your vendor that you can then use your credit to pay off.

Step 3 – Pay another bill using the credit

To use the credit against a bill:

Go to Pay Bills (vendor > pay bills)
Select the appropriate bill(s) that you want to pay using the credit
Below the bills click on the Credit button and use the credits (if you have credit left over, highlight another bill and repeat until either the credit is used up or the bills are all paid)
Continue as usual and pay selected bills

Wave Accounting Review

Greg Lam — Wed, 25 Apr 2012 17:18:32 +0000

How this review works

This Wave Accounting review is independently made by myself, Greg Lam. I run this website, Small Business Doer, with the goal of helping out micro and small business people. The review is my own personal opinion and I was not paid to do a review.

My background is that I’ve been a small business owner since 1998. I have a degree in business from Simon Fraser University in Burnaby, BC Canada (Vancouver). I’ve been doing bookkeeping for myself, and others, since 1998, primarily with QuickBooks. I’m also a certified QuickBooks Pro Advisor. So, that’s the perspective you’re getting and keep that in mind when I evaluate the software.

I’m compiling multiple online accounting software reviews and will do a comparison of all the software available when I’m done individually reviewing each piece of software.

I’ve chosen 31 topics to write about for my online accounting software evaluation. It is by no means complete, and if I’ve missed some important topics, feel free to let me know in the comments section at the end of this review.

Software also changes at a rapid pace, so at the time I wrote this, which is April 24, 2012, this was what was true as far as I could see.

I spent about 12 hours with the software. I imported a trial balance ending December 31, 2011 from my QuickBooks Accountant Edition 2012 Desktop software. From there I entered and reconciled 1 month’s worth of data up until January 31st, 2012.

This is both a review and a walk through. I decided to include all my notes that I wrote down as I navigated the software. I left them in so that others looking at Wave Accounting could follow along and see the errors I made, the limitations of the software, and the work arounds that I found.

I was contacted by Wave Accounting to say that if I needed any help that they’d be available. I decided to not take them up on the offer since I wanted to do the review from the perspective of someone who only had the software and Wave’s online help guide to work with. I do however open it up to Wave to suggest any corrections, offer up comments, and provide and solutions for problems that I ran into.

If there is anything that I’ve said that is inaccurate or not true, please let me know so that I can update the article.

Enjoy!

Topics

introduction
user interface
double-entry accounting
syncing with bank
importing data from bank
data import
data export
auto entry of data
document attachment
chart of accounts
reconciliation
reporting
multi-currency
taxes
invoicing
payment processing
payroll
inventory
integration
paid premium features
mobile app
search / finding data
small annoyances
other features
what’s missing
tracking changes / undo button
customer support
help / documentation
questions
country it’s made in
price
recommendation

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1. introduction

You can look at Wave Accounting at http://waveaccounting.com/.

Wave sign in

Wave Accounting is based out of Toronto, Ontario in Canada and the software is geared towards small businesses with 9 employees or less. Wave Accounting is totally free and is ad supported, sort of like how gmail is free but ad supported. Wave Accounting does have some premium services, such as payroll.

Right off the bat seeing that you have options for both your personal and business accounts, I would say it really is geared towards small businesses or even micro businesses (really small small businesses).

Wave software is for both business and personal accounts

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2. user interface

I’ve seen this a lot with online accounting software, where the “Dashboard” (home screen) contains an overview of some financial reports, bank balances, and other notices. While there’s nothing wrong with this, I’d rather my dashboard have the features I use most, which is entering transactions. Reports seem like a good idea to display, but I actually disregard all reports until I’ve verified that all the data is correct, and I can’t do that until I enter the transactions. If the dashboard was found in the reports section, that would be more useful to me.

Wave dashboard

One thing that bugged me about the Wave Accounting user interface is that it changes depending on what you’re doing or what kind of data you’ve imported. An example is that before I connected to a bank account, Wave Accounting gave me options to auto-connect to a bank or to manually upload a bank statement.

Wave imported transactions upload option

Once I auto-connected to my bank, the manually upload option disappeared and those options were then found at the bottom of the page.

Wave manually upload option moved to footer

In some ways that’s fine, since why do you need the manual upload button anymore since you’ve auto-connected, right? Well, I have a couple credit cards I need to add, so I was still looking for that manual button. I eventually found where the option to manually upload, but boy, was it some work. Also, the bank that did auto-connect only imported 15 days of transactions, so I needed an option to manually upload the non-imported transactions.

If the interface hadn’t changed on me, it would have been easy and a non-issue to upload those manual statements. Now that I know what to do, manually uploading is no longer an issue, but it is something that threw me off.

Navigation Notes

Here’s some notes on how entering some transactions in Wave went for me.

One of the first things I had to do, was create an invoice.

Adding a new customer, when creating an invoice, is as simple as clicking on the + button beside the “Customer Name” field.

Wave add new customer when creating invoice

When you go to add a customer, you get a pop up box with some simple options. You can click on the “Add additional information” button to get some more options.

Wave add new customer pop up box

Adding a product to sell is as simple as adding a customer. Again, click on the + button beside the “Product” field.

Wave add new product

Once you select whether the product is something you sell or something you buy, Wave Accounting gives you the option of choosing what Income or Expense account to link to.

Wave new product pop up box

I like how I don’t have to switch back and forth between windows to do functions associated with an invoice (such as adding a customer or adding a product). Some other online accounting software I reviewed didn’t do so well in comparison.

A problem I ran into, is how to enter expenses associated with an invoice. For example, I had an invoice where I deposited a check at a live bank teller and the bank charged me $1.25. I couldn’t add this fee to my invoice since it was an expense item, and only income items can be added as a product.

So, I only entered the income items into the invoice and am going to see if I can add them as I receive the payment. The receive payment button appears at the bottom of the invoice, once you have saved the invoice. I don’t like the fact that the Payments button is hidden until you send out the invoice, it would be nicer if “receive payment” had its own button, like in QuickBooks, or if it was greyed out or gave you some type of message saying you need to save the invoice first before receiving a payment.

Wave add payment

When I went to receive a payment, I couldn’t choose an undeposited funds account (a holding account that you use for funds that you receive but don’t immediately deposit into a bank account). I only had the option to deposit it directly to a bank account. So, I received the money, but I don’t know how to add the foreign loss and bank charges to this transaction.

Wave receive payment options

So, I go to “Imported Transactions” and try to split the transaction. I add lines, but it doesn’t give me options for choosing accounts to associate each line with, so I don’t know what will happen next.

Wave split transaction

The transaction becomes 3 transactions in the “imported transactions” window. Now I can associate each line item with an account.

Wave split one transaction into three

I can also try to match the items to existing records, like a receive payment record that I created. To do that, I click on the button with three dots to give me the option to “Match to existing record”.

Wave match to existing record

Wave Accounting pulls up an entry form that lets you find the correct payment to match the bank deposit to.

Wave match to an existing payment

The problem with this split method, is that if you look into your transactions for your bank account, the amount appears split up. If you go to verify this against your bank statement, the numbers won’t line up, since it’s been split. If there’s no problem, the total amount in the end will match, but it is an issue when you’re trying to locate discrepancies.

In my situation, $50 I received in US funds (I’m in Canada, so the amount needed to be converted to Canadian funds) ended up being a $48.40 deposit into my bank. $50 was the amount received, $.35 went to a loss on foreign exchange account, and $1.25 went to my bank charges. Instead of showing up as $48.40 in the transaction list for my bank account, it showed up as 3 separate transactions.

Wave split transactions makes it hard to match up to bank statement

I now have a transaction where I’m moving funds from my Accounts Payable (an uncleared check from before my trial balance date of 2011-12-31) but there’s no way to do it from the “uncleared transactions” window that I’m using since it’s neither an expense nor income. Accounts payable is a liability. To enter that, I go to Settings > Journal Transactions > Add transactions in order to manually move the money from my Bank (credit) to pay Accounts Payable (debit).

Wave manual accounts payable transaction

Getting back to the “uncleared transactions” for my bank account takes me another 3 steps. I click on “Imported Transactions”, choose my bank from the drop down box, then choose to show “50 per page” instead of 20 from the drop down box at the bottom of the page. So, to add that one item, which is a check that cleared, I had to go through 6 steps (3 to add the manual journal entry, 3 to go back to “imported transactions”).

Oddly, I can’t see any matching record for the journal entry.

Wave no match to journal entry

Hmmm… so match to existing record only works with transactions entered as an invoice payment received or a bill payment paid.

Wave match record "Use this tool..."

Ok, I’m going to enter an expense and attribute it to my accounts payable then. I go to “Expenses” then “Quick Entry”. Under the “Financial Category” drop down box, there’s no option for accounts payable. It only shows expenses.

Wave quick entry no accounts payable

Grrr… I totally didn’t see the “Mark as transfer” button. It says “Use this tool when a transaction happens between your financial accounts. For instance, a payment from your savings account to your credit card.” I feel a bit silly for not choosing this option before.

Wave mark as transfer

I select “Mark as transfer” and don’t see anything but transactions, so I scroll to the top and I then see the option to do something with my transfer. Oh no, no accounts payable! How in the world do I match my cleared check to an imported transaction!

Wave transfer to window

I can’t figure this out. I’m going to leave the transaction for now, but I’m assuming that I’ll have to simply delete the imported transaction since there won’t be any way to match it. I searched the help to see the deal with custom journal entries https://help.waveaccounting.com/customer/portal/articles/6056-adding-custom-journal-entries-. It appears that anything you do with a custom journal entry won’t show up under the “Income” or “Expenses” screens. They will only show up in your “Income Statement” report.

This is feeling to me like the logic behind some of QuickBooks which really frustrated me. You see in QuickBooks (and other software), there is sometimes more than one way to do something. If you don’t go to the exact same window that you used to enter a transaction, you sometimes can’t see it.

I’m now thinking that perhaps I should have used a different liability account than “Accounts Payable” to categorize my uncleared checks. So, I create a liability account called “uncleared checks”. Hurray, it shows up as a transfer option when I choose the “Mark as transfer” button. But I spoke to soon, it still doesn’t match!

Wave new uncleared checks liability account

I went on to try and chose the “create it manually” option, but I just end up with a double entry now! I’m going to delete the journal entry and this should solve it finally. However, I don’t see why the records won’t match.

Wave double entry

Now I’m moving on to deposit some funds that I received in 2011 before my trial balance into my bank account in 2012. In QuickBooks, I have an account called “Undeposited Funds”, which acts as a holding account for payments that you receive from customers but haven’t deposited into your bank yet. It’s an asset account. An example of where you’d use “Undeposited Funds” is when you receive a check from a customer on the 12th and deposit it on the 17th. Before the check goes into the bank, it needs to go somewhere, and that place is “Undeposited Funds”.

Wave Accounting doesn’t have an automatic “Undeposited Funds” account that gets created, like in QuickBooks. I categorized the undeposited check as “accounts receivable” when I did my trial balance to start off my books. Now that I deposited the check, I am again faced with the scenario that there is no good way to move funds from an “Accounts Receivable” account to my bank.

Wave no accounts receivable

I’m going to assume that I can’t create an invoice for this either. So, I think I’ll have to use the same solution that I did for those uncleared checks, which is to create an asset account called “undeposited funds” in my trial balance. It seems that Wave Accounting hides certain system accounts, such as “Accounts Payable” or “Accounts Receivable”. Ok, the account is created as an “other asset account” and I go to transfer the money from my new “Undeposited Funds” account, but….

Wave where is undeposited funds

No “Undeposited Funds” account. I think it’s because the “other current asset” account can’t be a payment account, so I’m going to create my “Undeposited Funds” account as a bank and see what happens.

Wave payment account

Yipee! That worked. I’m slowly beginning to figure out how Wave Accounting works. I’m very worried that people who don’t have the persistence to dig this deep and see how Wave Accounting works behind-the-scenes will get frustrated easily.

Wave payment accounts show up in transfer window

I now have a transaction that was in my “Accounts Receivable” that I can’t transfer or match up. I dig through the help files for the term “trial balance” and in an article find a link to this article on “Switching to Wave from other accounting software” https://help.waveaccounting.com/customer/portal/articles/8707-Switching-to-Wave-from-other-accounting-software.

If I would have read this, I would have saved myself some headaches. Wave Accounting instructs you to delete your unpaid invoices and unpaid bills in your old accounting software in order to avoid this problem. I haven’t confirmed with Wave accounting, but this has to be because you’d run into the problems I’m having, that there’s inflexibility with the type of accounts you can enter into the “Income” and “Expenses” screens as well as how you use the “Mark as transfer” button or the “Match to existing records” button when using the “Imported Transactions” screen.

The thing I don’t like about the Wave method of moving from old accounting software is that it asks you to change your old accounting software records. If you’re on desktop software, I suppose you could copy your file and manipulate the copy, but I would not want to mess with my old accounting file.

I’m still faced with the question of how do I handle my “Accounts Receivable” from before the trial balance? I create a bank account called “A/R from 2011″ and use that instead of the “Accounts Receivable” account. This works, because since I made the “A/R from 2011″ a bank account, I can transfer money from it to my business bank account.

So folks, this is perhaps another way of handling moving from existing accounting software or system to Wave Accounting. Create Asset and Liability accounts that have the option to be a “Payment Account” so that you can interact with those accounts in the “Imported Transactions” window.

Now that I’ve figured this all out, entering transactions through the “imported transactions” goes smoothly enough. I’m starting to get into a rhythm. I enter everything and am done all my transactions for my bank account for one month.

I start on my Visa credit account and all is well until I run into some payments that I made to my Visa card from my bank account. I now have duplicate transactions.

Wave payment duplicate credit card entries

I tried the “Match to existing record” button and the “Mark as transfer” button, but neither show my transaction and the payments are definitely duplicates. So, I delete them.

While checking my reports, something that I don’t like is when I want to dig further into a transaction, such as a expense paid with my credit card, Wave takes me back to my credit card transactions once I get out of the window, as opposed to back to my reports. This means I have to either press the back button a few times (and make sure to hit refresh) or go back and recreate my report.

The last thing I have to do is to enter my PayPal transactions.

Since I couldn’t upload my PayPal bank statement (see the importing data from bank section) and my auto-sync with my PayPal only brought in a few days, I have to enter all transactions the manual way.

I run into an issue when trying to double check to see if I entered all my transactions correctly. When I went into “Reports”, then “Balance Sheet” and chose a “Report Date” for the end of the month, my PayPal account doesn’t show up (not to be confused with my PayPal US account, which is a different account). I’m assuming that because there’s no balance in the account at the date I chose, it doesn’t show up in the report. Well, at least that confirms that I entered all my transactions correctly. But it’s not good because I don’t see any way to include my PayPal balance from the balance sheet report.

Wave where is PayPal

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3. double-entry accounting

Having a general journal entry window lets someone who understands bookkeeping / accounting quickly add transactions and make modifications to the books. In other words, this is an essential window for your bookkeeper / accountant to have and they’ll be glad to have it.

The general ledger / general journal entry function is under Settings > Journal transactions in Wave Accounting. If you’re not a bookkeeper or accountant, you may never want to touch this. However, it is very nice to have, since with this one window, you can do any bookkeeping / accounting transaction. This is the “old school” way of bookkeeping.

Wave journal transactions

I think Wave Accounting nicely sums up the use of this window.

Add double entry transactions that are not possible in regular income and expense tools

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4. syncing with bank

A big thing about Wave Accounting is that it can sync with your bank and auto-import your data on a daily basis. It can even auto-categorize your transactions. That’s neat!

Wave sync with bank

Syncing with bank notes

I connect to my bank an all looks ok, but I don’t see where to go next.

Wave import complete

I’m going to click on the dashboard button and see what happens. Apparently nothing. I don’t see my bank.

Wave dude, where's my bank

When I click bank on the “Account” button on the top of the screen navigation menu, my Vancity Bank does show up.

Wave there's my bank

Yet it doesn’t show up in my Dashboard. I try to connect again. It says I’m connected.

Wave bank is already connected

I try logging into my online business bank account (not Wave Accounting) and I find out it is locked. After phoning a service rep from my bank and getting it reset I’m figuring that I’ll be able to try Wave Accounting again.

Ok, it worked! Now I’m choosing which account data to import and it asks me about “type”.

Wave bank connected

Well, Wave’s telling me I’m successful, and has the option to do other accounts. I’m going to go ahead and work on my main banking account first to see how that goes.

After doing some other work, I need to add a couple credit cards. To do that I go to “Account” on the top nav bar.

Hmmm… Can’t find CIBC (the Canadian Imperial Bank of Commerce). I tried searching by CIBC, Canadian, Mastercard, and various other names that start with C to no avail. I ended up manually creating a CIBC Mastercard account (which you can see how to do if you go to the data import section of this article).

I was able to find and connect to my Vancity Visa account.

Curiously, after I’ve set up, connected to, and imported bank statements, only my Vancity bank account and credit card account that I auto-synced show up in my dashboard under “Bank Accounts & Credit Cards”. My CIBC Mastercard does not show up. I guess only your auto-sync bank accounts and credit cards show up.

Wave only auto connected banks show

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5. importing data from bank

You can upload Microsoft Money (.OFX), QuickBooks (.QBO), Quicken (.QFX), or Simply Accounting (.ASO). Most banks give you an option for one of those formats, so this should cover you. Would be nice to have a .CSV format, since that’s the most basic format.

Wave import data from bank

Importing data from bank notes

Now that I’ve successfully auto-connected my bank I can’t see the manual import button anymore.

Wave where is import button

I’m unsuccessful finding the import button when I go to the “Account” button on the very top nav bar. Likewise, I try to go to “Settings” and choosing the “Accounts” button, but no dice. Third try’s a charm and I find the way to manually import transactions for an already connected account in “Imported Transactions”. You go to “Imported Transactions” and then scroll all the way down, and find the little link that says “upload a bank statement”.

There’s an article on Wave Accounting at https://help.waveaccounting.com/customer/portal/articles/8039-upload-electronic-bank-and-credit-card-statements about how to upload electronic bank and credit card statements.

Wave upload a bank statement link

Success! I’ve got my first month of data from this year ready to reconcile, exactly what I wanted.

After successfully importing my bank and credit card statements, I’m stuck with my PayPal statement. The issue is that my PayPal doesn’t give me an option to download .OFX, .QBO, .QFX, or .ASO files. I only have .txt (tab), .csv (comma separated values), .IIF, and .QIF files.

Wave PayPal format options

Looking at the help articles in Wave Accounting https://help.waveaccounting.com/customer/portal/articles/452024-uploading-a-bank-or-credit-card-statement-in-csv-format, it does appear that I can upload .CSV statements. However, when I follow the instructions, I just get this:

Wave no CSV upload

This is odd, since I remember being able to import a CSV a couple months ago when I was initially checking out the software.

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6. data import

Wave Accounting does import of banking data quite well, as outlined in the above importing data from bank section, as long as it’s in the correct format. As far as I can see, bank data is the only type of data that can be imported into Wave. I searched “import” in the help section and found lots of great info, but unfortunately, found no articles on how I could import data.

If you’re moving to Wave Accounting from other software, it looks like you’re starting from scratch for chart of accounts, customer, vendors, invoices, etc…

That means you need to go through the chart of accounts and modify it to match your existing banking records. The way to do that is to go to “Settings” on the top nav bar and then go to “Accounts” on the side nav bar. From there you can add and delete accounts. If you click on “Account Balances”, you can enter a trial balance.

Wave create accounts

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7. data export

Data export is a big thing for me, since I want to be able to take my data with me in case something happens (like the software company merges, goes out of business, or I decide to use another service). It’s also good for people who like to play around with their numbers in a spreadsheet. Lastly, sometimes you want to export certain pieces of data (like say your customers) into another software application like CRM software (Customer Relationship Management).

Wave Accounting can export any of its reports, as outlined in this article https://help.waveaccounting.com/customer/portal/articles/234933-what-reports-are-available-can-i-export-reports-.

Balance Sheet
Account Transactions
General Ledger
Income Statement
Sales Tax Report
Income by Customer
Expense by Vendor
Aged Receivables
Aged Payables
Gain/Loss on Foreign Currency Exchange

Your options for export are PDF or Excel spreadsheets.

You can export all your data in one shot by clicking on “Accounts” and then finding the “Export Your Data” section.

Wave export all data

This gives you some additional data not found in the reports section, such as:

account list
account accounts
clients vendor
clients customer
products product
taxes taxtype
transactions billitem
transactions inoviceitem
transactions payment
transactions transaction

I don’t know about the naming of the above reports, but between the reports export and the data export, you should have all you need.

One thing that worries me a bit with the export is that taxes paid and collected aren’t easily matched up to single expense or income transactions. That means you’re going to have a fun time (I’m being ironic) trying to reconstruct entries from this data. You’re going to have to reference your source documents (your original receipts or saved invoices) and / or match items in your reports in order to be able to figure out what taxes were charged for a particular expense or invoice. There are reports that show you how much HST you paid, but it’s only giving you part of the picture.

Wave hst only part of the picture

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8. auto entry of data

There’s a couple ways to talk about auto entry of data.

I believe most people relate this to the ability to connect to your bank (or upload a bank statement) and have your online accounting software automatically enter all the transactions for you.

Wave Accounting does have this ability.

You do have to remember that it’s not going to be 100%, so you’re going to have to verify each auto-entered transaction. You’re also going to want to match your documentation (your proof) to that auto-entered data as well. Auto entry data is cool when it works.

The second way you can think about auto-entered data, is how much your software remembers of transactions that you manually enter, such as what expense account and taxes are associated with a particular vendor.

Wave accounting has no ability to remember the account categorization and the taxes associated with a vendor when doing manual entry (note, this is for manual entry, not the auto-sync feature). I’m assuming this is the case since the whole premise of Wave Accounting is that you won’t be doing manual entry.

Auto entry of data notes

In Wave Accounting, once you connect to your bank or import your data, it’s now time to categorize. Off the dashboard you can either go to the “Imported Transactions” tab on the top nav bar or click the “to categorize” highlighted orange button from the dashboard.

Wave imported transactions

Ok, my first bank import only has 15 days. I guess I’m going to have to do a manual import of the rest of the data.

Wave does recognize transfers between accounts. It will automatically give you an option box to verify the transfer.

Wave auto detect transfer

One thing I noticed as I proceeded to enter 2 credit cards and 2 bank accounts, was that the smart auto-categorization feature was not kicking in. This is where Wave Accounting recognizes a transaction that you entered earlier (say a coffee from Starbucks) and remembers how you handled it last time.

Perhaps Wave was not auto-categorizing for me because I was working off of imported bank statements or perhaps it needs some more time to learn. I’ll have to see how it handles my auto-synced statements in a few weeks. I’m quite certain the auto-categorization / auto-entry feature works, since I got my brother to start using the software a few months ago to track his personal expenses and it was working for him.

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9. document attachment

Wave Accounting has no native document attachment feature, but it can connect with Google Docs. To enable this, you go to “Settings” and choose “Google Docs” from the left hand nav bar.

Wave Google Docs integration

Document attachment is important to me since you need to back up your bookkeeping records with documents, such as the receipt for some equipment you bought. You can of course keep a digital or paper based record system outside of Wave, but I’ve found it incredibly useful to have the proof attached to my bookkeeping software’s record, since it’s very easy to double-check the document for something like a data-entry error.

I didn’t get great results when I tried to attach documents in Wave Accounting unfortunately. I tried the “add new file” button, under Files, which showed up at the bottom of an invoice I was creating. When I selected a file to add, nothing happened.

Wave add file

Something that is too bad is that you can’t attach documents to every type of transaction, only invoices and bills. So, even if the document attachment feature worked (it’s currently in beta), it’s not a viable solution for those that want to attach proof to each transaction in their Wave Accounting software.

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10. chart of accounts

If you don’t know what chart of accounts is, it’s a listing of all your accounts (Income, Expense, Assets, Liability, and Equity). Believe it or not, but some software I’ve seen doesn’t easily have this ability to see all your accounts in one page in a way that bookkeepers and accountants would like.

Wave Accounting shows you your accounts in a few ways. If you’re looking to add or edit accounts, you can do so under Settings > Accounts.

Wave chart of accounts

It would be nice if Wave let you see your account balance or description from this page. It would also be nice to have the ability to click on the account name to see all the transactions in that account. The only thing you can do from the “Accounts” window is to add, edit, or delete accounts.

One thing that you want to make sure when you’re creating accounts, is that you categorize it correctly. Once you’ve categorized your account, there’s no way to modify it. I’ve had to re-categorize accounts for many clients, so it’s too bad that this can’t be done in Wave.

Wave account edit options

If your accident prone, Wave Accounting lets you re-create previously deleted accounts. This is handy if you accidentally delete an account.

Be careful when setting up your opening balance under Settings > Account Balances. You can’t copy and paste any amounts that have commas in them (I did this when doing my trial balance).

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11. reconciliation

Reconciliation, the process of matching transactions in your bank statement to transactions in your accounting software, is a crucial step in the bookkeeping process. This is because it verifies the data you’ve entered into your books.

A reconciliation process that is easy to use is a crucial feature for me.

In a way, when you’re entering data into Wave Accounting, you’re also reconciling. You use the “Imported Transactions” window to verify your transactions and categorize them into the correct accounts.

A major issue I have with Wave is that the “imported transactions” window is supposed to replace reconciliation, but this didn’t work out well for me, as witnessed in my notes below and in my recommendation section.

Some Reconciliation / Categorization Notes

I find it a bit confusing that all my different banks and credit account transactions are mixed (perhaps because I file my documents by bank and credit card account). I used the drop down box to only show one account at a time. It would be nice to also have the option to only display certain time frames, such as all transactions in one month, but I don’t see that option.

Wave filter accounts to display in imported transactions

Once you’re categorizing uncategorized transactions, you can click on the three dots on the right hand side of the transaction to open up more options.

Wave uncategorized more options

To categorize your transaction, you click on the check box and then click on the appropriate category on the right hand side. It was a bit confusing at first, but once you understand it, it’s fairly easy.

Wave categorizing expense

One of the advantages of Wave Accounting is that you can categorize multiple transactions at once. I don’t know if this saves me much time or not, but it does seem handy.

Wave categorize multiple transactions at once

One issue I ran into was when I incorrectly entered a date. I accidentally created an invoice with today’s date, not the month it was supposed to be in, which is January. When I received the payment, I think it automatically chose the invoice date. I’ve since fixed the payment date and the invoice date, yet in my account records, the transaction still shows up as date I incorrectly entered.

Wave receive payment wrong date

I remove the payment to try again, since I can’t have that transaction wrong by several months. When I go back to the “Imported Transactions” window, the transaction doesn’t show up. I then go to the “Income” window and proceed to add the payment for the invoice. That works, and the transaction shows up in my account transactions report for my bank.

All right, I reconciled my bank account for the month of January. I ended up having to manually export an excel file in order to match it up against my bank statement. The problem I had was that the Debits and Credits didn’t match my bank statement, since when I split transactions for items such as bank charges when depositing a check, I ended up with more Debits than Credits on the Wave Account Excel spreadsheet. However, if I deduct the Credits from the Debits on both my bank statement and my Wave Accounting Excel spreadsheet they match, so I’m thinking that we’re all good with this verification.

Wave getting debits - credits to match

Reconciliation in Wave Accounting, is a serious issue for me, a bookkeeper, since I think it’s going to be very hard to verify that my records are accurate. If I go into the “Reports” section, choose “Account Transactions”, and then choose my bank account, I get a list of all the transactions that have gone through my bank account. What I don’t get is an ongoing balance after each transaction or an overall balance at a certain date. Without the ability to see my balance, there’s no point that I can say, “everything up to this date” is correct.

Wave no bank balance in account transactions report

I’m sure there’s got to be some way around this. For example, it does give you debits, credits, and the total of each. So, knowing that, you can probably use that to match the numbers to a banks statement. But, one of the things about reconciliation is that you have a starting off point, like the balance as of the end of day January 31st, 2012 is $12,003.24. If you knew that, then you could verify, but you only get the debit and credit totals.

There’s a bank balance total that you can see by going to the “Dashboard” window. This is actually the balance pulled from your bank account, not from Wave Accounting software, so I don’t find this helps with reconciling.

Wave bank balances

Thinking on this, I decide to go “Reports” and go to “Balance Sheet”. If I filter the date, I can now get a bank balance as of a certain date.

Wave balance sheet

To reconcile I have to combine the two reports and manually do some checking.

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12. reporting

Reporting is the end result of your bookkeeping efforts that most people are eager to see. It’s how much you made, how much people owe you, how much you owe people, etc…

Wave Accounting has all the standard reports you’d like, Balance Sheet, Account Transactions, General Ledger, Income Statement, Sales Tax Report, Income by Customer, Expense by Vendor, Aged Receivables, Aged Payables, Gain/Loss on Foreign Exchange.

Wave reports

Something I noticed with the “Expense by Vendor” report is that it only showed you manually entered expenses. Anything that was entered using the “Imported Transactions” window didn’t show up, I would have to think that because that process doesn’t let you choose a Vendor name. So, this report wouldn’t be too accurate for Vendors where you don’t manually enter all the expenses.

In QuickBooks I definitely have more advanced reporting functions. QuickBooks has hundreds of stock reports, with each report having the ability to be customized, filtered, and memorized. For people used to QuickBooks’ extensive reporting capabilities, they may feel restricted by Wave’s options. For those people that need the basics, which is probably a large amount of Wave’s targeted business demographic of small businesses with less than 9 employees, they should be able to do just fine with Wave’s reporting abilities.

You can export your reports into Excel and mess with them, which is something that I do even with my QuickBooks reports.

I do like that you can drill down into transactions and find out more details. For example, if you wanted to check out all the expenses in your “Meals & Entertainment” category of expense, you’d click on the name and you’d then be able to see all the individual transactions.

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13. multi-currency

Multi-currency is something that’s becoming ever more crucial in today’s business world. Many people sell to and buy from multiple countries and collect / pay in more than one currency.

Wave Accounting has the ability to handle multiple currencies. For a test expense I entered, Wave pulled the exchange rate data from XE.com, which is a cool feature, especially for foreign cash receipts. I remember having to manually look up exchange rate history online, which is a real pain.

Wave multi-currency

I don’t do much multi-currency myself, so wasn’t able to really test out how good the multi-currency works. However, it seems to work smartly in automatically calculating the converted value of the money on the day of the transaction. That’s nice.

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14. taxes

Taxes are something I can best comment on from a Canadian perspective. For us, we have federal and provincial taxes that we have to track and file. Having proper tax tracking capabilities is an essential function for Canadian businesses.

The UK has VAT (value added tax) which is similar to our Canadian Federal Tax (GST – Goods and Services Tax). I believe the way we handle taxes is fairly similar, but I’d need someone from the UK to let me know (or perhaps an accountant who practiced in both Canada and the UK).

For the US, I don’t think you guys claim back any sales tax for items that you buy, so it’s not as crucial as a feature? If anyone out there in the US knows, please let me know.

Wave gives you the option to select whether or not your transaction has taxes associated with it. To open up the option to add sales tax to the transaction, click on the button with three dots on the right hand side of the transaction. A nice thing about the taxes, is that if the auto-calculated tax amount is not correct, you can type in the correct amount. This is good for sales receipts where some items have taxes and some don’t.

Wave sales tax in imported transactions

When it comes time to file sales taxes, you go to Reports > Sales Tax Report.

Wave file sales tax

Seems fairly basic to me. If you’ve entered all your transactions correctly, I suppose you’re good and don’t need many more options. However, from my experience filling out Canadian forms, it would be nice to have a report that gives you all the information you require to fill out your GST form, such as your total sales and the corresponding line numbers (as seen in the report I pulled from QuickBooks).

Sample QuickBooks GST / HST Report

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15. invoicing

Wave Accounting does invoicing. It also integrates with FreshBooks (whose primary feature is invoicing), so if your invoicing needs are more robust, you can use FreshBooks to do your invoicing.

Wave create invoice

You can also somewhat customize your invoices in Wave and choose from a few looks.

Wave invoice customization

Wave doesn’t have advanced features, such as inventory. If you’re looking to do that, you’re best to use Wave’s FreshBooks integration (FreshBooks can do inventory).

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16. payment processing

Payment processing is the ability to send an invoice out to a customer and have them pay via credit card, debit card, PayPal, or some type of online method.

Wave has no payment processing. However, it integrates with FreshBooks, which can do this.

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17. payroll

Being able to do your payroll through your accounting / bookkeeping software is nice if you have employees. Calculating payroll manually is doable, there are online calculators that can help you. However, the reason you want to use software for your bookkeeping is so that you don’t have to do things manually.

Wave’s only premium feature is payroll. You can read all about Wave’s payroll features on this site https://payroll.waveaccounting.com/welcome/landing.

I haven’t tested out this feature, so can’t comment. It’s only Canadian payroll (US coming soon). The price is $3 per employee per payroll, which isn’t too bad if you have only an employee or two. What it does include is direct deposit to your employee’s accounts, which is a nice feature. Manually writing checks, printing slips, and stuffing envelopes sucks.

Wave payroll

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18. inventory

Being able to track inventory is an essential function for any business that sells products that they need to keep track of.

Wave has no inventory feature, but it integrates with FreshBooks which has some basic inventory functionality (like tracking inventory levels), so the combination FreshBooks and Wave will solve that need.

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19. integration

The power of software is that it can integrate with other software so that applications can share data automatically. If you are using software for CRM, payroll, invoicing, e-commerce, etc… whether or not your online accounting software can import that data can be a crucial deciding factor for you.

In other cases, sometimes your online accounting software won’t do everything, so the only way to get a feature is to integrate with other software that can do it.

Wave integrates with FreshBooks, which integrates with PayPal, so I’m assuming that if you invoice via Freshbooks, this is a way to import all the money you receive via PayPal easily into Wave (although I’m only assuming, I haven’t tested). Wave’s integration with FreshBooks is also in Beta, so be sure to test it out before relying on it.

Wave also integrates with Google Docs for document attachment for invoices and bills. It’s in beta mode as well. In my tests, the feature didn’t work, so if it’s something you need to reliably have right now, I wouldn’t count on it.

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20. paid premium features

Wave Accounting is completely free. The only price you pay is seeing ads in your interface. I’d actually strongly consider paying a bit of money to remove the ads.

Wave is ad supported

The only premium feature that Wave Accounting has, is the payroll feature, which is discussed in the Payroll section. Essentially it’s $3 per employee per payroll period (only available in Canada now, but US is coming soon).

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21. mobile app

It should be noted that any online accounting software can be accessed via your web browser, regardless of your device. However, when an online accounting software provider has a device specific app or a mobile version of the site, it’s designed to work well with in that aspect, so it can be an advantage if you’re planning on accessing your books through mobile devices.

Wave Accounting doesn’t have a mobile app. Even though I have an iPad and an Android smart phone, I don’t care that the software doesn’t have a mobile app, unless the app were to do something beyond what the web browser version could, such as connect with PayPal’s mobile payment system or take pictures of receipts and attach them to records.

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22. search / finding data

Being able to find your data easily is nice! This is actually quite an important feature since I find bookkeeping can be an investigative type of job. The more powerful your search capabilities, the faster you can work.

Wave Accounting doesn’t have any universal search button, so you can’t search your records like you can use Google to search the Internet. I don’t know if any software has this capability, so, it’s not a knock against Wave. However, I have seen software have search capabilities within certain windows or types of transactions, which Wave doesn’t have.

I think your best bet if you want to search Wave is to go to Reports > General Ledger and click on “Detailed”. This will give you all your transactions for all your accounts. You can then use CTRL + F (windows) or COMMAND + F (Mac) to search for a dollar amount or the transaction description.

Wave search

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23. small annoyances

I put this small annoyances section in there to talk about some small things that aren’t really a big problem, but it would be nice if the software acted differently.

One issue I have with Wave Accounting is that there is no easy way to match my digital and paper documents (like my receipts and bank deposits) to my Wave Accounting records. The transactions don’t have any unique identifiers that I can see, with the exception that you can have Invoice numbers or Bill numbers. But not every transaction is an invoice or a bill. If I had a unique number or code for each transaction, I could label my paper and digital documents with that code and I could match them up, in case of an audit. It does seem there is a description window available for most types of transactions, so that could mostly work, but I don’t like a mostly solution, I want a “it works in every situation” solution.

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24. other features

Other features is a section to add in features or functionality that didn’t get their own section.

One feature that Wave Accounting has that wasn’t mentioned was the ability to add Guest Collaborators. You can do this under Settings > Guest Collaborators. You can give full access or the ability to only view, but not edit.

Wave collaborators

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25. what’s missing

Here’s some items that I found missing in Wave Accounting. I’m sure that other users will come up with items as well. The important thing to consider when evaluating online accounting software is to see whether it has the features / functionality you need, and whether the items missing are something you can work around or live with.

Wave can’t import a General Ledger. I don’t know if any software can, but if there was some template you could use to reformat your data, then I could see this being a cool feature.
Budget. No way of tracking your budget vs. actual. Possible of course to do an export of a report and then do it in excel, but it’d be nice to have a basic budget feature for profit and loss.
A proper way of reconciling. There’s no easy way of verifying your transactions, which is something I sorely missed when entering my data.
A way to import a .CSV bank statement. This might seem minor, but I think that almost every bank can give you a .CSV file of all your transactions. So, the ability to import a .CSV statement is a valuable feature.
An audit trail. There’s no way that I can see to access a record of all your transactions, included deleted and modified transactions. An audit trail comes in handy when you’re trying to figure out how your clean set of books suddenly became messed up (usually because of an inadvertently changed or deleted transaction).

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26. tracking changes / undo button

Being able to track what you are someone else has done is important for auditing / investigating how data was entered and manipulated. I use it more for the “how did this happen” so I can fix it rather than the “who did this” ability.

Another function that is good to have with software is the ability to undo a mistake or to redo something that you accidentally deleted.

Wave Accounting lets you undo the lastest transaction that you did. I can’t find any way to undo more than the last transaction.

Wave undo button

Wave Accounting has no audit trail.

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27. customer support

Customer support is a crucial feature for some users, especially those who are not as comfortable with software as others. I kind of default to looking at what kind of existing documentation is out there, since I don’t like waiting on support to potentially help me out.

I can’t give any comment on customer support since I didn’t use it. I was approached by Wave Accounting, asking if I had any questions, so that’s a bonus. That means they’re paying attention to their twitter feed.

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28. help / documentation

As mentioned above in the support section, I’d rather see great help / documentation than great support (although I’m sure others would have their priorities reversed). Having information that is easy to access and easy to understand is something that’s nice to have.

I did use Wave’s help files. In most cases, it was able to help me find the answer I was looking for, even if to confirm that Wave Accounting couldn’t do what I wanted it to.

If you’re moving to Wave from another accounting system, I’d suggest looking at their Year End Resources & Tax Prep set of help topics https://help.waveaccounting.com/customer/portal/topics/116371-year-end-resources-tax-prep.

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29. questions

This is an area that I was going to use for questions that I have for Wave Accounting. I’d also like to add suggestions to this category.

Are you able to open up the limitation of only being able to use certain accounts in certain windows, such as only being able to use income (categories) in your income window? There are plenty more examples, but letting the users choose more than income accounts will greatly increase the flexibility of your software. I’m pretty sure the reason you limit account options is so that novice users don’t accidentally choose the wrong accounts. However, I’ve seen software like QuickBooks give a warning if a user is trying to choose an account that is not normally associated with the window, like choosing an expense account when creating an invoice. Kashoo does a different approach where it does not show the other accounts initially but has an option to show all accounts. Bothe QuickBooks and Kashoo options work for me as it still protects the novice user while at the same time allowing the advanced user to handle their books easier.
Can you keep your user interface consistent? I really don’t like buttons and options moving around on me.
When you create a bill or invoice, you’re able to attribute your income or expense in that invoice or bill to multiple accounts. Why then, do you have to split up certain transactions into multiple transactions (like when you’re adding an expense through the “Imported Transactions” window?
Reconciliation, please! Some way to reconcile with check boxes and balances. Even a report that helps with reconciliation would be a good start.

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30. country it’s made in

In some ways, the country where the software is made shouldn’t matter. However, I think for accounting / bookkeeping software, it matters more than other types of applications. This is because the people in their own country should (and emphasis on should) naturally design the software to fit the needs of their local tax and accounting requirements better than software made in another country. I’ve noticed this especially when it comes to taxes and payroll.

Wave Accounting is based out of Toronto, Ontario in Canada.

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31. price

Price is always an important factor for businesses. One thing I think you should consider is how much does it cost you to not pay for what you need. Or in other words, how much time (whether it’s your “free” time or someone’s paid time can you save by using the software).

One of Wave’s greatest attributes is that it is absolutely free! The only thing that you have the option to pay for is payroll, but even if you don’t choose that option, you can still manually enter your payroll.

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32. recommendation

Wave Accounting was designed with user friendliness in mind. A quote from their about us page is:

Wave Accounting is an intuitive, 100% free, easy to use accounting application that’s built for small business owners, not accountants. (Actually, accountants love us too! In fact, we have our own Pro Network just for accountants.)

I have a couple issues with this statement. The first is intuitive. I really don’t find the software intuitive. Now that I’ve spent many hours with it and understand how it works, I think I can handle doing what I need to do with the software.

On the flip side, I can see what Wave Accounting was going for, which was to try to be intuitive for someone who doesn’t know bookkeeping or accounting. In a perfect world, where you didn’t have any odd transactions, I can see how Wave Accounting would kick some ass. I’ve yet to see a set of books that didn’t have any non-standard transactions. Here’s a few situations that you’ll run into where Wave’s intuitive software becomes non-intuitive:

Any time you deposit more than one check at a time into your bank account. Since Wave Accounting has no “Undeposited Funds” account, there’s no intuitive way to handle this (you have to split the transaction, in case you’re wondering).
Any time you are charged a fee, whether it be a bank service charge, merchant account fee, or gain / lose money on foreign exchange when you deposit money into your bank account (you have to split the transaction).
When the automation doesn’t work, such as when matching up transfers between accounts.
When using “Imported Transactions” for anything other than expense or income accounts.

I have a hard time seeing how accountants would love Wave Accounting. I’m going to throw myself into the accountant corner, even though I’m a bookkeeper, which is different than an accountant. This is probably not the best analogy, but an accountant is like a doctor where a bookkeeper is like a nurse. A nurse can do a lot of the day to day care of patients whereas the doctor makes the bigger picture decisions (I’m sure I probably tick off some nurses and or doctors, sorry).

In any case, I thinks it’s the inflexibility with the way transactions are handled is what would make accountants not like Wave Accounting. My experience with Accountants is they completely understand double-entry accounting (debits and credits – or in other words doing Journal Entries) but they don’t necessarily understand bookkeeping software and their rules. So, I can see accountants simply wanting to fix a problem by going to that journal entry window, but finding that entries made there don’t show up when you’re trying to reconcile, which is the “imported transactions” window.

Reconciliation is really at the core of why I can’t use Wave Accounting. I think the whole concept of the auto-sync and auto-enter software is that it gets rid of the reconciliation process. In reality, what happens is that it makes the reconciliations process (the verification that your bank records match your accounting software records) more difficult. If items you enter through a journal entry can’t be matched to transactions in your “imported transactions” screen, then how do you reconcile?

What does Wave Accounting do right and who could benefit from it? As a personal expenses manager, I think it would do great! That’s because there is room to not be 100% accurate, there is no requirement to provide documentation to prove the transaction, and tracking taxes doesn’t matter. I in fact recommended Wave to my brother to manage his personal finances, and for the most part, it worked well for him (although, he did have the same type of reconciliation / duplication issues that I ran into).

Wave, when the auto sync for banks is working, allows a business person to easily keep up to date with their latest finances, which really is a crucial need of small businesses.

Wave also has all the benefits of online accounting software, in that you don’t need to worry about installing software, backing up, networking computers, different versions of your files, being able to invoice only from the office, and having multiple people work on the file at the same time.

One of the items that I didn’t get to cover in great detail was the automated entry of data, as Wave Accounting gets smarter over time in remembering past categorizations of expenses and income. Providing that this works the majority of the time, I can see how this could help speed up the bookkeeping process.

For the small business owner, would I recommend Wave? As odd as this may sound, because Wave is supposed to be intuitive, I’d recommend Wave if they are able to do some training on the software first. I think that if they were taught for a few hours on how to use the software, they’d avoid many of the issues I ran into. In fact, Wave does have a pro network of accountants that specialize in Wave http://waveaccounting.com/pro-network/.

As easy as software is supposed to make the whole bookkeeping process, I think the small business owner who doesn’t enjoy or know bookkeeping will find many ways to screw up their books. It’s almost inevitable. When that becomes the case, how easy is it to fix those mistakes, whether through help from non-paid others (support staff, help documentation, online forums) or paid help (bookkeepers and accountants). I think that anyone who uses the software should make sure they have a bookkeeper or accountant who knows Wave Accounting that can be at their disposal. Again, Wave’s pro network may solve this issue.

As mentioned at the top of this post, I’m doing an online accounting software review and comparison. So feel free to check out that page for more reviews.

Kashoo Review

Greg Lam — Wed, 18 Apr 2012 02:25:42 +0000

How this review works

This Kashoo review is independently made by myself, Greg Lam. I run this website, Small Business Doer, with the goal of helping out micro and small business people. The review is my own personal opinion and I was not paid to do a review.

I’m compiling multiple online accounting software reviews and will do a comparison of all the software available when I’m done individually reviewing each piece of software.

I’ve chosen 32 topics to write about for my online accounting software evaluation. It is by no means complete, and if I’ve missed some important topics, feel free to let me know in the comments section at the end of this review.

Software also changes at a rapid pace, so at the time I wrote this, which is April 17, 2012, this was what was true as far as I could see.

I spent about 16 hours with the software. I imported a trial balance ending December 31, 2011 from my QuickBooks Accountant Edition 2012 Desktop software. From there I entered and reconciled 3 month’s worth of data up until March 31st, 2012.

That’s a lot of time to spend with the software, but, I definitely didn’t look into every aspect of the software. I feel I’ve gotten a fairly good idea of what the software is capable of. If there is anything that I’ve said that is inaccurate or not true, please let me know so that I can update the article.

Enjoy!

Topics

introduction
user interface
double-entry accounting
syncing with bank
importing data from bank
data import
data export
auto entry of data
document attachment
chart of accounts
reconciliation
reporting
multi-currency
taxes
invoicing
payment processing
payroll
inventory
integration
paid premium features
mobile app
search / finding data
small annoyances
other features
what’s missing
tracking changes / undo button
customer support
help / documentation
questions
country it’s made in
price
recommendation

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1. introduction

First of all, you can check out Kashoo for yourself at http://www.kashoo.com. It has a free sign-up, with no credit card required. It is actually free for their basic package, which does a lot.

It’s a company based out of Vancouver, BC Canada. I didn’t even realize this until I started reviewing the software (I happen to live in Vancouver as well).

For micro and small businesses, this software should fit the bill. The best thing about the software is it’s user interface and how easy and intuitive to use. As a bookkeeper, I like how it’s easy to see behind-the-scenes and dig into the accounts, something that is not as easy to do (or find) in some other online accounting software services.

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2. user interface

I’m not going to lie. When I saw the dashboard I actually said YES and was smiling and excited. I think this window alone will allow you to enter the majority of your transactions from one window. This is mega-cool (I don’t think I’ve ever used that term before).

Kashoo dashboard

I think the reason I vibe with Kashoo so well, is that it keeps a lot of the information viewable within one screen, making it intuitive.

For example, the dashboard, on the income side, has “Enter Income”, “Enter Invoice”, “Enter Payment”, and “Detailed” as tabs. My assumption is that “Enter Income” is for income you’re getting right away, “Enter Invoice” is for billing your customers and receiving payments later, “Enter Payment” is for receiving payments for your invoices, and “Detailed” is for a more complicated transaction.

It’s perhaps subtle, and you may need to use it to experience it, but when you click on the tab, your interface doesn’t change on you, it doesn’t feel like you’re going to a new window. There’s no refresh or lag time. This is something that can’t be listed on a features list.

It really makes me feel like comparing it to Apple products. In spec to spec comparisons, Apple usually isn’t the winner. However, it’s the user interface that wins people over. You simply have to use it to understand (although I have other issues with Apple and am still mainly a PC / Android guy, some things that Apple does, like my lovely MacBook Air, they do so well).

I like how you have Income, Expenses, Transfers, Adjustments (general ledger), and Banking (reconciliation) at the top of your left hand nav column. Much easier to understand for the beginner than QuickBooks Desktop. In QuickBooks Desktop, you use one window called “write checks” for bank account expenses that are paid immediately, “enter bills” and “pay bills” for expenses that you pay at a later date, and “enter credit card charges” for items paid with a credit card. Once you understand this, it’s not too bad to deal with in QuickBooks, it’s just not as intuitive as Kashoo.

Kashoo navigation menu

When you’re digging deeper into something, say a cleared bill, if you go in and delete it, it conveniently gives you a “go back” button so that you can get back to what you were doing. (In QuickBooks Desktop, there is no back button, you have to navigate back to whatever window you were using. However, in QuickBooks Desktop, you sometimes have a save and close button that would achieve roughly the same thing).

Kashoo go back button

When using accounts, it has notes about how to use it. It even has notes to say “don’t use this account for…”. Nice touch.

Kashoo account notes

I initially thought that Kashoo couldn’t split transactions while reconciling. You can in fact split transactions and it’s fairly easy. Categorize the transaction in a category and then click on the transaction link to go directly to the transaction and add more detail from there, such as splitting an account.

Kashoo split transactions

You can’t attach tax codes to vendors or accounts, so when you’re entering a transaction from vendor, you have to manually chose a tax code. This slows down data entry in comparison to software that either lets you associate a tax code with a vendor when you set up that vendor or that remembers what you did last time for a similar transaction.

The interface of Kashoo is defaulted to simple, but with a click of a button, you can usually drill down further and do what you’d expect it to do (at least from a bookkeeping standpoint). Example, creating a new bank account you only have three options (1. Name, 2. Description, 3. Type – Bank or Cash). You then click on add account.

Kashoo defaults to simple - but easy to go advanced - ex: adding a bank account

To modify you click on the account and you can adjust more settings, like the account # and description.

Kashoo modify a bank account

It auto-assigns account numbers, which I think is nice. You can change the number if you want, but it numbers them in a way accountants would like automatically. I also found that there’s a feature to sort all your accounts by their account numbers, for the accountants, bookkeepers, and people like to sort and number in that way.

Kashoo auto-assigns account numbers

Recording batch deposits is definitely better in QuickBooks. To record a batch deposit in Kashoo, you go to “Transfers” and then transfer funds from your “undeposited funds” account into one of your bank accounts. In QuickBooks, it gives you a list of all the items in your undeposited funds, and let’s you select which ones you want to deposit. Furthermore, once you do that, you still have the option of adding line items to adjust the deposit for things like bank fees or gain/loss on foreign exchange. In Kashoo you’d have to use the “Adjustments” window, to do the same thing. QuickBooks simply has a better work flow for this one.

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3. double-entry accounting

The general ledger / general journal entry function is called adjustments in Kashoo. If you’re not a bookkeeper or accountant, you may never want to touch this. However, it is very nice to have, and have easily accessible, since with this one window, you can do any bookkeeping / accounting transaction. This is the “old school” way of bookkeeping.

I think the problem some software gets into is that it tries to have one or several “easy” ways to handle every bookkeeping scenario. This means lots of different windows to use and to remember.

Having a general journal entry window lets someone who understands bookkeeping / accounting quickly add transactions and modifications to the books. In other words, this is an essential window for your bookkeeper / accountant to have and they’ll be glad to have it so easily accessible.

Kashoo adjustments window

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4. syncing with bank

Kashoo can sync with your bank if you upgrade to the $9.99 a month premium price.

The sync imports up to 90 days and it is still in beta. This feature is located under SETUP > accounts (I think it would also make sense to link to this from banking as well, that’s the first place I looked and I assume others clicking on banking would think to find the “bank feed” feature there as well – or at least a link to this feature).

In Kashoo’s tutorial video, it says if your bank is not in the list, email them (so that presumably they can add it). Perhaps they have to match the bank’s data to Kashoo’s, which requires a person to manually do this? If so, what’s the turnaround time?

Kashoo auto bank sync

When connecting, it asked for a security authentication question. I entered, and pressed connect, but the question remained. So I entered the question again and hit enter. It then had an error communicating with bank. So, I logged into my bank and then it was able to ask me a different security authentication question, but that still didn’t work.

Now my accounts is a constant circle of dots ever refreshing for over 30 minutes at this point. Hmmm… after an hour I logged out and back in and can see my accounts now. The good old reset button works in online software as well (although I didn’t lose any data doing this with my online software).

Kashoo forever refreshing

I tried my personal bank account, Royal Bank of Canada, since it is a large bank in Canada. Curiously, Kashoo is not set up with it yet (although I have the option for Royal Bank of Canada (France) – Investments – so go figure). So, no auto-bank connect for the moment, going to go the manual way.

** UPDATE: I tried again with my CIBC mastercard account and it did connect and import, but only 30 days. I had to upload a bank statement to get the rest of the data in. We’ll see how the auto-connect works now that it has been set up. Kashoo is looking into my other bank accounts. **

** UPDATE2: I’ve been told by Kashoo that they do indeed have the Royal Bank of Canada. It’s listed under RBC. Something I would have completely missed quickly typing in Royal. I’ll assume it works (I won’t be testing since it’s my personal account). They have confirmed that Vancity business has been giving trouble and that they are working on it. It should be said that I haven’t been able to sync my Vancity business account with other online accounting software providers, so I’m going to go out on a limb and say this is an issue with Vancity. In any case, through my testing of various software, I’ve noticed the auto-sync to not be 100%, so I think it’s a crucial option to be able to upload banking statements (which Kashoo does quite nicely). **

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5. importing data from bank

You can import OFX, QFX, or QBO file statements easily.

Kashoo import OFX, QFX, QBO

You can also import CSV, QIF, XLS (Excel), or VCF (vCard). The process, the first time around is a little more work, since you need to tell Kashoo, which field contains which data. Once you set it up once, it will remember. This is actually a powerful feature in that it lets you work with any data set in the way that you want.

Kashoo import CSV, QITF, XlS, VCF

PayPal import notes

Kashoo does split PayPal into USD and CAN PayPal accounts, when you import a PayPal statement. However, if you send and receive money using the same PayPal account, the transactions get confusing fast (read my “why you should use two PayPal accounts for your business” article – I’ll put a link to it when I post it).

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6. data import

You can import a trial balance, customers, and vendors. That’s all that’s importable at this moment.

Kashoo import trial balance

Trial balance import notes

You can’t import successfully unless account names match. You have to go into your csv import file and manually change account names. ~~The account names also have to exist in Kashoo before the import, so I had to go and create all the missing accounts in Kashoo first.~~ Update: The account names don’t need to exist in Kashoo before importing. I don’t know whether this changed or whether I was initially mistaken.

Here’s the instructions for what needs to be done http://kashoo.desk.com/customer/portal/articles/237247. Clearly can’t import a QuickBooks trial balance export (or probably any other software) without modification.

Everything has to be perfect, meaning your account# has to match and your EXACT spelling of Account Name as well. Otherwise the import won’t work.

~~The descriptions and previous balances get written over, so if you have existing amounts or descriptions that you want to keep, make sure to put that information into the import file.~~Update: Ok, this seems to have changed to. In my latest test, if your description is left blank, Kashoo will keep it’s description. I don’t know what happens to accounts that have 0 balance though.

Any accounts that are not in your upload will be DELETED, so be careful.

You can go back into the change log and restore items that got messed up in an import, but, you have to do it on a per account basis, you can’t undo the whole operation (as far as I can tell).

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7. data export

The fact that Kashoo has decent data exports makes me less nervous about entering all my data into a system that I may not use forever.

You can go to SETUP > Business Profile to find the “Export” box (right hand side of screen).

Kashoo export all your data

Tried it out and it has all the categories you would like, such as trial balance, profit and loss, customer contacts, expenses, etc… No general ledger though.

Kashoo data export spreadsheet tabs

Ok, here’s the general ledger. You need to go “Transactions” to do this. It has the ability, so that’s cool, but don’t know why it isn’t on the big everything export. In any case, I’m happy it’s there and the formatting seems organized well.

Kashoo general ledger export

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8. auto entry of data

There’s a couple ways to talk about auto entry of data.

I believe most people relate this to the ability to connect to your bank (or upload a bank statement) and have your online accounting software automatically enter all the transactions for you.

Kashoo doesn’t have it.

If you are going with software that does it, you have to remember it’s not going to be 100%, so you’re going to have to verify each auto-entered transaction. You’re also going to want to match your documentation (your proof) to that auto-entered data as well. Auto entry data is cool when it works.

In Kashoo, you can set up Vendors to be associated with one expense account (and I’m assuming you can do the same thing for customers), but that’s about it as far as I could see.

The thing I enjoy about QuickBooks is that once I type in a vendor name, it remembers the account and tax code (either based on previous entries or me manually enter the info into the vendor profile). Most of the time it’s correct, and this speeds up the process.

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9. document attachment

Sorry, Kashoo has no document attachment at the moment.

This is unfortunate, since you still need to back up your bookkeeping records with documents, such as the receipt for some equipment you bought. You can of course keep a digital or paper based record system outside of Kashoo, but I’ve found it incredibly useful to have my proof attached to my bookkeeping software’s record, since it’s very easy to double-check the document for something like a data-entry error.

The one thing that Kashoo does that I like is number all their transactions with a unique ID (technically 2, but I’m only going to talk about the one that’s easy for you to see).

For example, when you enter a receipt, it gives it a name like Bill #00023. With that ID, I can then put that on my digital or paper record, so that I can easily find the documentation relating to a particular Kashoo record. I still want the document attachment function though!

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10. chart of accounts

Kashoo has an easy to access chart of accounts. If you don’t know what chart of accounts is, it’s a listing of all your accounts (Income, Expense, Assets, Liability, and Equity). Believe it or not, but some software I’ve seen doesn’t easily have this ability to see all your accounts in one page in a way that bookkeepers and accountants would like.

In Kashoo, the chart of accounts is found under SETUP > Accounts in the left hand nav bar. It lists all your accounts and lets you click to modify. It groups them by type (bank accounts, credit cards, income, etc…) and sorts them alphabetically.

Kashoo chart of accounts

If you want to sort by account number, click on “My Profile” on the top right nav bar and in your user profile, click the “I am an accounting professional”. You have to log out and then log back in. Once you do this, you’ll see your accounts sorted by number.

Kashoo sort by account number

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11. reconciliation

A reconciliation process that is easy to use is a crucial feature for me. Kashoo’s reconciliation process works for me, with the slight caveat that I couldn’t find my account balance as of a certain date when I was reconciling a bank statement that I imported into an account that was being auto synced with my bank (I had to do the upload since the auto sync only brought in 30 days worth of data).

In Kashoo, you can match via an electronic statement or a paper statement. It’s nice that you have the flexibility to go with either.

Kashoo reconciliation - choice of style

I like how Kashoo gives you the option of choosing between different matching amounts when you’re reconciling your account. When downloading QBO files into the QuickBooks Online Banking Centre in QuickBooks, it would auto-match for me, and sometimes it would get the wrong transactions. It’s more clear in Kashoo which transactions is being matched to your bank statement.

Kashoo reconciliation - matching options

If you have duplicate entries on the bank import, you can click “Remove from bank statement”. (In QuickBooks Desktop, this is simply not possible when you import an electronic bank statement using the Online Banking Centre).

Kashoo "remove" button for reconciliation

If you have multiple duplicate entries, because you imported a duplicate statement for example, you can “Remove Unmatched Rows” to get rid of the statement entries. (In QuickBooks, this is not easily possible when importing an electronic bank statement using the Online Banking Centre).

Kashoo reconciliation remove unmatched rows

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12. reporting

Reporting is the end result of your bookkeeping efforts that most people are eager to see. It’s how much you made, how much people owe you, how much you owe people, etc…

Kashoo has all the basic reports, like A/R (how much people owe you), A/P (how much people owe you), Balance Sheet, Profit and Loss, Trial Balance.

Kashoo Reports

You are able to click down on any item and drill down (get more detail) on any aspect. You are also able to adjust the dates, and sub-sections of data (account, customer / vendor, item, referral). I haven’t had much time to play around with the reporting, so can’t say too much about it. It does look to have all the basics you’d need.

Although I haven’t gone through it in depth, I’m feeling that my QuickBooks has more reporting functions, or at least more in the area of one-click reports.

I also don’t see any of those fancy data visualizations (although I did glimpse it on the iPad app). I think visualization would be cool, but I’m much more of a numbers guy. I don’t see any options for %’s, and that’s actually something that I would like to see. Also, being able to sort by highest to lowest would be nice as well.

The saving grace is that this data is easily exportable to a spreadsheet, so if you’re really into messing with numbers, you can go nuts there (I actually do this, even with QuickBooks).

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13. multi-currency

Multi-Currency is a premium add-on (you need to upgrade from the free account to the $9.99 a month account).

I haven’t robustly tested this feature out, but it seems like the feature would work well, in that it lets you enter the exchange rate and it also gives you the option to “Exchange Payment” or not, meaning keeping the transaction in the foreign currency value or switching it to the equivalent home currency value.

Kashoo multi-currency

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14. taxes

For the US, I don’t think you guys claim back any sales tax for items that you buy, so it’s not as crucial as a feature? If anyone out there in the US knows, please let me know.

In Kashoo, the “Taxes” window is cool because you can put the % eligible amount, like for meals and entertainment.

Kashoo file sales tax

I still have to file taxes though, so I don’t know fully how good / robust the tax filing is.

For Canadian taxes, you can use a short code, such as -2.40H to subtract $2.40 for taxes from the total and attribute the value to the HST account (that’s a tax code). This is great, because during data entry it saves you time, since not all items are taxed (like tips in a restaurant), so you can’t always reverse calculate taxes paid when you’re giving a total.

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15. invoicing

Kashoo can do invoicing. It’s not as advanced as other software, since it doesn’t do inventory and such. You can add items though, if you don’t care to track the stock levels of your inventory.

Kashoo invoicing

You can customize your templates if you are able to code XHTML or get someone to do it for you. Otherwise, you’re stuck with their template.

Kashoo custom invoicing

It also integrates with FreshBooks (whose primary feature is invoicing), so if your invoicing needs are more robust, the combination may be the thing you need.

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16. payment processing

Payment processing is the ability to send an invoice out to a customer and have them pay via credit card, debit card, PayPal, or some type of online method.

Kashoo has no payment processing. However, it integrates with FreshBooks, which can do this.

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17. payroll

Kashoo has no native payroll, but it does integrate with Payment Evolution (more about this in the integrations section of this article)

Kashoo no payroll but integrates with Payment Evolution

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18. inventory

Being able to track inventory is an essential function for any business that sells products that they need to keep track of.

Kashoo has no inventory feature, but it integrates with FreshBooks which has some basic inventory funcitionality (like tracking inventory levels), so the combination FreshBooks and Kashoo will solve that need.

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19. integration

In other cases, sometimes your online accounting software won’t do everything, so the only way to get a feature is to integrate with other software that can do it.

Kashoo integrates with FreshBooks, which integrates with PayPal, so I’m assuming that if you invoice via FreshBooks, this is a way to import all the money you receive via PayPal easily into Kashoo (although I’m only assuming, I haven’t tested).

It also integrates with a Canadian payroll company, Payment Evolution. So, if you need to do payroll, you can do it as well, even though it’s not a native feature. A quick look at Payment Evolution gives me the impression that’s it’s full featured (and actually free for up to 5 employees, which is pretty amazing). For those in the US or UK I don’t know what your options are.

Kashoo integrations

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20. paid premium features

A lot of online accounting software has extra features that you can only get if you pay for money. If you don’t need the extra features, this can work out in your favour.

Premium Add-ons
$9.99 a month ($99.99 a year) for single users – $29.99 a month ($299.99 a year) for a team

Automated Bank Import
Multi-Currency
FreshBooks Import
Share Kashoo
* Unlimited Users (only for Kashoo Premium for Teams at $29.99 a month)
Priority Email and Telephone Support

Kashoo premium

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21. mobile app

Kashoo has an iPad app. Haven’t tested, so I can’t comment. I hear that an iPhone app is on the way. No plans for Android.

Kashoo iPad app

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22. search / finding data

The search in “change log” seems to be very powerful, in that the change log contains every single transaction, whether it was modified or deleted. This means that you can search by different criteria to find what you’re looking for.

Kashoo search change log

The search in “transactions” lets you see all the transactions, which means it will filtered out modified or deleted items. Contains slightly different data than the “change log”.

Kashoo search transactions

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23. small annoyances

I put this small annoyances section in there to talk about some small things that aren’t really a big problem, but it would be nice if the software acted differently.

In Kashoo, it would be nice if when you type in a new vendor name (or account name) it asks you to add it if it’s a new name. Right now Kashoo ignores whatever you inputted. Adding a new field is as easy as clicking on the “Add Vendor” link at the bottom of the drop down box, which then gives you a pop up to add a new vendor.

Kashoo add vendor

It’s a bit confusing that bills have the “invoice#” in it. I understand that a bill and an invoice are the same thing (the business who sends an invoice to a customer calls it an invoice, a customer receiving the invoice calls it a bill).

Kashoo invoice or bill

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24. other features

Other features is a section to add in features or functionality that didn’t get their own section.

Kashoo has a way to print checks. Haven’t tested this, so don’t know how it formats. Not a big feature for me, since you can manually write checks if you need to, but if you are printing out tons of checks, this could be a very useful time saver.

Kashoo print checks

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25. what’s missing

Here’s some items that I found missing in Kashoo. I’m sure that other users will come up with items as well. The important thing to consider when evaluating online accounting software is to see whether it has the features / functionality you need, and whether the items missing are something you can work around or live with.

Kashoo can’t import a General Ledger. I don’t know if any software can, but if there was some template you could use to reformat your data, then I could see this being a cool feature.

Budget. No way of tracking your budget vs. actual. Possible of course to do an export of a report and then do it in excel, but it’d be nice to have a basic budget feature for profit and loss.

QuickBooks Desktop has a nice feature where you can make calculator calculations in number fields (such as if you type in 2000-1000 into an “amount” window, it would calculate 1000 for you)

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26. tracking changes / undo button

Another function that is good to have with software is the ability to undo a mistake or to redo something that you accidentally deleted.

The change log is a VERY neat feature of Kashoo. You can see every single thing you’ve done (and if multiple users, I’m assuming you can see who did it).

Kashoo change log

If you did something by accident, like delete a transaction, you can restore it

Kashoo restore transaction

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27. customer support

For Kashoo, I can’t give much feedback on this, since I’ve never directly contacted support. However, I left some comments on twitter and a feature request on their forum, and did have members from Kashoo’s team contact me.

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28. help / documentation

Kashoo help files seem easy to read and actually helpful. I like how it approaches items as if people don’t know bookkeeping and recommends the right steps for the right user (here’s how you can do it, but if unsure, contact professional – shows the pros and cons of actions)

Kashoo help

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29. questions

This is an area I’ll use for questions that I have for Kashoo.

When under SETUP > accounts, and you’re connecting to a bank feed, are you able to navigate away, or do I have to wait while the software is connecting? Also, why does the credentials window still show up after you enter your username and password. Once you enter, it would be more intuitive if it said something like “Thanks, now connecting to your bank. Don’t navigate away or your bank connection will be terminated”. Lastly, when I was able to successfully connect to my bank, it only pulled in 30 days of data and gave me no option to pull in more.
When I was using the search feature in various areas, such as in “transactions” or the “change log”, it didn’t seem to be able to search by dollar amount. Is there any way to search by dollar amount, short of exporting the data into a spreadsheet?

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30. country it’s made in

Kashoo is made in Canada.

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31. price

Kashoo is amazingly free for basic, $9.99 for premium, $29.99 for premium teams. See Kashoo’s premium pricing plan here.

I think that if you’re a micro business with only yourself or a few people, the free price may be just the thing for you. Although at $9.99 a month, it’s not much. For those small businesses, $9.99 a month is nothing, and if you need to go with the $29.99 because you have lots of people that need to touch your books, well then the $29.99 a month should also not be a huge expense item for you.

Kashoo pricing

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32. recommendation

Right off the bat, I can’t recommend any one software that’s best for you, since every person and business has different needs. What I can recommend, is who and what kind of business this software would be good for, in my humble opinion.

At this point in time Kashoo is the only online accounting software that I’ve done in-depth review of. I’ve spent from 30 minutes to a few hours with the other software seen in my online accounting software review and comparison page. Why Kashoo first? Because out of all the software, it’s the one that I can see myself moving to from my existing QuickBooks Desktop solution.

In comparison to my initial impression of other software out there, Kashoo was simply very intuitive to move around. I didn’t read any manuals or help documentation when I was exploring software. I simply clicked around to see if I can find how to do what I needed to do.

Kashoo was fast to respond to my clicks, there’s nothing I hate more than sitting at my desk, waiting for something to happen (that’s why I have SSD hard drives). I mentioned this above in the interface section, but Kashoo seemed to be designed with the goal of having you click the least amount of times to get to what you needed to do.

So that’s great, Kashoo has the user interface down, it’s better than anything else I’ve seen. What about the behind-the-scenes stuff, stuff that bookkeepers and accountants would like?

I think it has everything that a bookkeeper / accountant would want. Really, a cool thing is the data export, that lets you get everything. So for bookkeepers or accountants who don’t like dealing with software can read the standardized spreadsheet that has tabs for everything like trial balance and profit & loss (although for some weird reason, you need to export the general ledger / general journal separately).

On the other hand, the data within the software itself should be easy for bookkeepers and accountants to find and work with, so hopefully it may not even be necessary for them to export data.

One thing that I can’t get is the perspective of someone who doesn’t know bookkeeping and whether they feel the interface and functionality are as user friendly and the work flow is as solid as I do.

Kashoo doesn’t have the level of automation that some software out there does. Although, I have noticed that the most automated software tends to be geared towards the one-person businesses where the owner is doing everything (and doesn’t know anything about and hates bookkeeping). If you are in fact someone in that situation, you may find software that’s more advanced in its automation features.

I think that’s ok that Kashoo doesn’t have some automation, since I feel to do your books properly, you need to verify each transaction, which means you can only automate so much. Until there is a universal standard for transmitting purchases and sales data among banks, sellers, buyers, and accounting software, I don’t think it’s going to be possible to get 100% accuracy with the current automation technology. Although, I really do wish there was some universal standard, because that would save so much data entry time and eliminate a lot of errors.

Something that QuickBooks Online (google search it, since there’s a different online version for you, depending on where you live) does better than Kashoo is remember what you’ve done before. It’s similar to the auto-fill function on phones (that occasionally gets people into trouble). The more you use it, the smarter it becomes.

If you’re doing a straight feature-to-feature comparison of Kashoo versus other online accounting software, and Kashoo (including what it can do with its integration with FreshBooks and Payment Evolution) has the features that you need, I’d go Kashoo. The user interface and workflow are simply the best I’ve seen and make me wonder why other companies are not doing it like Kashoo does. If Kashoo doesn’t have the features you need (or think you need) are there work-arounds that you can live with? I don’t think I’ve encountered any software that does everything you want or does it in the exact way you’d like it to.

At free in its basic form, Kashoo would be a good choice for any small business, providing it’s not missing some core functionality that you need.

Business Plan Update March 2012 – More Sales?

Greg Lam — Fri, 13 Apr 2012 00:08:57 +0000

Overview

Financials were through the roof this month. I did a lot of subcontractor payments, but still good numbers in the end.

I’m lagging in sales in other parts of business and it seems like video is kind of taking over. I’m slowly freeing up time to work on non-video projects and every month I’m getting rid of some responsibilities that are taking time away from my business growth projects. It’s getting better though.

Business Activities

Video, online training with a huge emphasis on video, and bookkeeping are my company’s main focus now. I know the first two are quite related, being video, but it may seem to the observer that bookkeeping isn’t so related.

Bookkeeping has come out as one of my interests. I don’t like it because I like entering transactions, I like it more for the challenge of creating a system that’s efficient. I feel there’ s a lot of room for improvement in this area. Also, financials are a core component of every business, so making the whole process better will help out all businesses, which is what I’ve set out to do with Small Business Doer.

I helped to upgrade the BCPVA website. I volunteer as an executive there. We had an all day coding session, which worked wonders. We were able to revamp the site in a day, and because there were three of us together, we could quickly make decisions and get all we wanted to done. It took 11 hours and we got it done. If we had tried to do this separately, a few hours here, a few hours there, I don’t think it would have gotten done, especially since it is a volunteer, non-paid position.

I’ve been looking into online accounting software for the needs of a few bookkeeping clients. I’ve been feeling that getting through QuickBooks is not easy enough for the average person doing bookkeeping (who’s not trained to do bookkeeping).

Beta testing the QuickBooks Bookkeeping System Video Course has been ongoing. I had a couple initial testers who gave me a bit of work in revising / improving the course. I want to open it to a wider audience as soon as I can, but still don’t want to launch a paid course until I feel it is solid. I know that I will continue to revise the course as time goes on, however, I don’t want the course to scare away people because it feels unfinished.

Projects

A few projects I worked on this month are below.

Vmax Fitness Machines (link to video to come)
UBC Lectures
Small Modern Living
Altec

Profit & Loss Budget vs. Actual – March 2012

Income went quite well this month. As mentioned, I’m lagging in the non-video categories at the moment. I’m currently working on optimizing my site to promote my educational products and bookkeeping services, so this should start to change in April and May.

This month, like February, not much advertising expense (due to not officially launching the QuickBooks course) and no professional fees (although they’ll be in next months budget).

Profit & Loss Budget vs. Actual - March 2012

Conclusion

I’m getting really excited about finally being able to launch my QuickBooks Bookkeeping System Course. It feels like after all the work creating, editing, and revising, the big task is now going to be promoting the course.

April is not looking as busy as the past three months, so hopefully the down time, and the fact that I was able to bring in extra money in the first quarter of 2012, will let me comfortably work on growing my business.

Updates

Check out the previous update Business Plan Update February 2012
Check out all the updates

Online Accounting Software Review and Comparison

Greg Lam — Wed, 11 Apr 2012 17:42:52 +0000

I’m going to do a online accounting software review and comparison and try and help you figure out what’s best for your bookkeeping needs. However, I first have to define the problems that are trying to be solved.

This is going to be an ongoing document, that I’ll continue to update as I get more information. So please do ask questions, add comments, give suggestions in the comments section below and I’ll incorporate it into this document. This document may get so big that I’ll split it up into separate posts. Remember, it’s about the best online accounting software for your needs, not necessarily what the “best” software is. I’ll try to do an overall comparison of all the accounting software once I complete the individual reviews.

This article was last updated May 11th, 2012.
This is important to note, since software changes so rapidly, the facts in this article can and will change.

I’m currently reviewing various online accounting software providers, so will post them as I get them done, then do a roundup of all of them. This essentially means redoing a few months of bookkeeping for each software provider… it’s going to take a bit of time.

Here’s my dilemma. I’ve been trying to help myself and my bookkeeping clients work on the same set of files. I’ve traditionally been a QuickBooks user (have been since 2000). The old method of doing this was to physically go to wherever the computer with the software was. This was fraught with a few downsides.

The old year 2000 method of doing your accounting using bookkeeping software

Travel time: to get from one location to another.
Scheduling: had to setup a time to meet, taking time out of the bookkeeper’s and the client’s day.
One software license: you need to have a license for each computer the software was on, which means extra money, extra hassle to install, and need to be on the same computer operating system.
Different software versions: both parties, bookkeeper and client needed to have the same version of QuickBooks. If one party had a newer version of the software, it would update the file and then the party with the older software couldn’t use it.
Portability of bookkeeping file: way back when (and even now honestly), the files could not be emailed, so you needed to physically get the file on something portable, like a CD.
Versions of bookkeeping files: if the bookkeeping file was transferred over to a bookkeeper to work on, the client couldn’t touch their books, without the risk of having two different versions of the same file.

From 2000, some things progressed over the next decade which brings us to 2010. There were a few nice additions that cut down on the work.

Some 2010 solutions to problems from 2000

Scanning: digitally scanning in your documents to an electronic format was possible, thus potentially eliminating the need to physically take all the receipts from a location or having to work at a location where all the receipts were located.
Networking: if you had some tech savvy people, you could virtually network computers. This was quite complicated, but cool if you could get it to work. If you were a business that had multiple people that needed to use the same software on a daily basis, this may have been a worthwhile and necessary expense and effort.
Emailing large files: services like yousendit arrived, allowing you to email large files. This worked and still works.
File hosting / sharing service: Dropbox was the first big name on the scene. Dropbox was magical (and still kind of is to me) because it allowed you to sync one file across multiple computers and operating systems. You could even access your files via the web. It’s free and lets people share documents easily.
Online Accounting Software: companies were starting to develop software that lived
Remote Desktop: Remote desktop, whether through using something like the Windows based “Remote Desktop” or a service such as logmein allowed you to connect to your computer remotely. This meant you could work from and get access to your computer from anywhere.
Digital bank downloads: you could download your digital file statements from your banks to make reconciling and data-entry easier.

New problems introduced around 2010

Networking: unless you had a specialist on call at a moment’s notice, sooner or later your network would break, leaving you stuck with having to digitally send files back and forth or physically going to a location
Size of files: as it became possible to email attachments with bigger sizes, the sizes of files grew. So if you had a small company file, it was possible to email files, but this didn’t last for long once your file size got bigger.
Duplicate files: when sending files was possible, the problem of versions became even bigger. Who has the master file(s)? With a file hosting / sharing service like Dropbox, conflicts became an issue, since QuickBooks is database driven. Conflicts means that there is more than one version of the file. For regular non-database files, this happens when two people work on the file at the same time. However, I’ve noticed with QuickBooks, there are conflict issues even when two people are not using the file at the same time.
Digital and paper filing system: Now that some transactions were done purely online, and receipts and invoices were sent digitally, you have to contend with two filing systems, a digital one and paper one. For people who hate filing, this is twice the headache. Paper in some ways was easy, because you had one master paper copy. With the mix of digital, you could have multiple versions of the same document. Which version was the real one, which one do you keep?
Remote Desktop: Working at your desktop remotely is slow and buggy. You drop your connection and have to reconnect. You click on something or type something and there’s a few second lag. Very frustrating and difficult to work with. However, if you only needed to do a little bit of work, this could be acceptable. You also have an issue with security. When someone uses a remote desktop application to get to your computer, they have access to everything on your computer. This is a big risk.
Digital bank downloads: some many download formats. If you were lucky, you’d get the right format to work with QuickBooks (QBO) and it could work. This was not always the case. Despite entering some data for you, you still needed to verify the digital download with your actual paper or digital documents (your receipts, invoices, etc…). If you made an error, you couldn’t easily undo the digital download. I actually have a whole articles worth of why digital downloads don’t work well with QuickBooks (this will be a link to the new post when I write it).

What I need my modern online accounting software to do

Access from anywhere, by anyone, regardless of device, platform, operating system: this means that your accounting software is not dependent on if you are MAC or PC, whether you have the latest operating system (Tiger, Lion, XP, Windows 7), whether your computer is networked or not, even whether you are on a desktop, and where you physically are. Your data is truly mobile.
No more file version problems: there is only one file, the online file, that’s the master file! No more emailing those files back and forth, no more worrying about who has the master file.
No more software version problems: there is only one software version for every… single… user. It is always up-to-date
Better user interface: QuickBooks was created in the 90′s (fact check). The world of bookkeeping and accounting was different back then. Writing checks was the norm and online shopping was not to be trusted and rare. This was before the dot-com boom and bust. Successful software remains powerful while being extremely user friendly. The more easy and intuitive, the better.
Syncing with bank / Import of banking datas: All the electronic information is out there. Wouldn’t it be nice if your bank and your accounting software talked to each other? Reconciling is the process of matching your bank records to your accounting / bookkeeping records. Computers can do this for humans.
Double-entry accounting: I want to see the proper method of bookkeeping / accounting with a general ledger that can be used for any non-standard, difficult, or custom scenarios you’ll inevitably run into. Ease of use is nice, and I’d like to have the majority of transactions done through a nice user interface that non-bookkeepers or accountants can understand. However, anything can be done with a general ledger, so it’s nice to have that in case the easy way doesn’t work.
Document attachment: Since it is easy to digitize your records, it should be an easy task to attach your records (your proof) to each transaction you enter into your software. It should be as easy and effortless as dragging and dropping a file to attach to an email in Gmail (get picture).
Data export: Your records should be your records. If I don’t like the software, I should be able to easily get my data. If your company goes out of business, I should get my data. If I no longer need the service, I should get my data. Get it, I should get MY DATA. My data should also be in an common format that can be read on any computer. Proprietary databases suck.
Integration: It’s nice to have all the features you could want built into your online accounting software, but it’s an impossibility and unnecessary to get everything. Therefore, the better integration with complimentary services, the better.
Auto enter my data: Why am I manually inputting all my bookkeeping transactions when there’s digital records of all of them?

Reader requests

I’ve added this section to add features that readers have suggested they would like to see that’s important to them.

Multi-currency: many modern businesses now sell and buy in more than one currency.
Import of existing bookkeeping / accounting data: Any existing business has legacy data that would be nice to import into their new software (for QuickBooks users, lessaccounting does this).
Customer support: is there help available when you need it?

The reality of post-2010 online accounting software:

Access from anywhere, by anyone, regardless of device, platform, operating system: this is mostly a reality. Different online accounting software services are better than others. As long as you have a web browser, the software should work. There are some native applications for mobile devices (whether iPad, iPhone, or Android) that make it easier to use on those devices, but you still have access through those device’s web browser. The native app makes it easier.
No more file version problems: this really has been solved. There is only one online file.
No more software version problems: this also has been solved for web browsers. The up-to-date software is the one you are working on in your web browser. This may not be so true for native apps on mobile devices.
Syncing with banks: this kind of works, sometimes. How well it works depends on the online accounting software provider and the bank. The best case is that your bank and online accounting software love each other and once set-up, you don’t do a thing. The worst-case, your online accounting software have not even been on a blind date and there’s no getting the two together. You can’t even use the online accounting software because to function, it needs to talk to your bank.
Document attachment: ~~I have seen no good solution for this~~ I have seen it work, it’s in lessaccounting.com. ~~It must be a difficult engineering feat, since no one can do this or do it fully within it’s software~~. I’ve found out that kashflow integrates with dropbox.
Data export: there are two types of data you’d want. 1. The actual software database file (in case of some server meltdown). I don’t think this is possible to get from any service. 2. The exported copies of the data. You can’t recreate your books easily from this file, but it has all the information that can be read in any spreadsheet or text editor. This export file is available in varying degrees of goodness from the different online accounting software provider.
Integration: There is some good integration out there, but there can always be more. The most important one is with banks and merchant service providers (PayPal for example). This should be essential integration. The next set would be to integrate well with e-commerce stores, since more and more sales are going online. Lastly, with complimentary services such as an invoicing specific program (like FreshBooks which kind of is an e-commerce store in a way) and payroll.
Auto enter my data: This is the main touted benefit of some the online accounting software out there. As long as your bank and your online accounting software talk to each other, this can work quite well.

The downsides of post-2010 online accounting software:

No internet connection: if you don’t have an internet connection, you can’t get access to your data. Yes, you can download your data from the good services, but still, you can’t do any work on your files until you get your internet connection back.
Always paying: some services are free, but as your business gets bigger, you’ll probably find yourself subscribing and paying for some things. This is fine, but this also means that to keep your data up-to-date, you always need to be paying. Although, at the end of the day, if you decide to stop using the service, the good services light you export all your data to a common digital format (like CSV) that will let you keep all your digital records, even if you don’t have the software.
Document attachments: your accounting needs to be backed up by proof. Attaching your proof to your bookkeeping records in your online accounting software is an absolutely necessary feature that no one is really doing as well as I’d like (although some do ok at this). This needs to be native feature, something that’s not an add-on or plugin, but lives within the software itself. These files need to be accessible, downloadable, and named in smart manner (date, transaction id, name-whether vendor customer, etc…, amount). Names like 0358626342.pdf are no good.
Syncing with banks: this is spotty, since not all banks works with all versions of software. It’s kind of like Betamax vs. VHS. You can only use online accounting software that your bank works with. This is not entirely true for all software, and there are work-arounds, but there is definitely not a standard of banking information transfer amongst all banks and accounting software providers.
Auto enter my data: sometimes this works well, sometimes not so well. It really depends on your online accounting software and it’s workflow / user interface. The good ones let you find and easily delete duplicate entries, split transactions into different accounts, and recognize previous entries and record new ones in the same fashion.
Double entry accounting: if you’re not a bookkeeper / accountant, you may not know what this is. Essentially, it’s the method by which all bookkeepers and accountants are taught to work with financial transactions. If the online accounting software doesn’t do this, your bookkeeper / accountant will not like it and if you grow, you’ll need to switch to software that does this. It should be noted that even though the software does this, it usually does this in the background, meaning you can still have a good user interface and work flow for those not familiar with bookkeeping and accounting.
Are you picking the winner?: how long will your online accounting software provider last? With so many options out there, there’s bound to be a thinning out of services where only a company or two emerge as the leader and go-to solution. Think Google for search or Facebook for social networks. Yes, there definitely are competitors, but they truly are the leaders and the standard. This is why data portability is so crucial. You don’t want, and can’t have, your data gone. You are required to keep your records by law.

What are some different online accounting software providers out there that are good for small and micro businesses?

It’s important to define the target market of users. I didn’t do this when I first wrote the article. Here’s the rough demographic of the target user:

small or micro business
1-100 employees (although more in the 1-10 employees range)
1-5 people touching the books (the more people that need to touch the books, the more requirements for limited access for certain users, which requires more robust (read: expensive and complex) software

Kashoo
lessaccounting
xero
Wave Accounting
outright
Quickbooks Online US, Quickbooks Online Canadian, QuickBooks Online UK
KashFlow
Mint (not for business)
FreshBooks (more invoicing than accounting)
Intacct (suited for large small businesses and medium sized businesses – starting at a few hundred dollars a month, it’s not designed / practical for micro and small businesses)

Topics I’ll cover in my reviews

introduction
user interface
double-entry accounting
syncing with bank
importing data from bank
data import
data export
auto entry of data
document attachment
chart of accounts
reconciliation
reporting
multi-currency
taxes
invoicing
payment processing
payroll
inventory
integration
paid premium features
mobile app
search / finding data
small annoyances
other features
what’s missing
tracking changes / undo button
customer support
help / documentation
questions
country it’s made in
price
recommendation

The actual online accounting software reviews

I’ve realized the scope of this article is definitely bigger than a single post, so I’m going to break this up into different posts as I continue to collect information. Below is the list of sections I plan on writing and expanding on. As I get the articles posted, you will be able to click on the topics below.

Kashoo online accounting software review
Wave Accounting software review
Less accoutning accounting software review
FreshBooks review
Quickbooks Online accounting software review
Outright accounting software review
Xero accounting software review
Mint review
KashFlow Online accounting software review
Indinero accounting software review
Why I’m really not digging QuickBooks Desktop, but QuickBooks Online US is cool… and what happened to QuickBooks Online UK and Canada?
Why can’t we easily digitally attach documents?
The problem with syncing bank records to accounting software records

Despite all the negatives of QuickBooks, it is the most popular small business accounting software out there. I’ve done up a guide to make your life easier when trying to do your bookkeeping with QuickBooks.

Business Plan Update February 2012 – QuickBooks Bookkeeping System Done!

Greg Lam — Wed, 07 Mar 2012 23:22:33 +0000

Overview

Ok, another great month in February. It has been surprising to me that both January and February were so strong. If you compare my sales to last year’s numbers, you’ll see there’s quite a big jump.

I feel like I say this often, but I’m taking the work while I can, since my business can be up and down, since a lot of my work is project based. At times it can be very busy, other times, very slow.

I finally finished the Quickbooks Bookkeeping System Course!

QuickBooks Bookkeeping System

It took a long time, but is done, now to test and market it. The last goal I could remember was to have it done by the end of 2011, so I’m at least 2 months behind.

One of the recent problems I ran into creating the QuickBooks Bookkeeping System Course was that I had some initial problems creating a membership site. Essentially, a membership site is sectioning off part of your site to those who pay for access.
I initially went for amember. Integration with WordPress (the web publishing system I currently use on this site) was painful. As a result, I dropped it for Wishlist Member. Using Wishlist Member was much easier. I did havea a few hiccups, but it works well right now.

I also figured out that Wistia was a good solution for my video hosting needs. It allowed me to protect my videos when in my membership site, meaning people couldn’t access my video unless they paid for the course.

Because Wistia is a video hosting service, to embed their player was a simple copy and paste of code. I didn’t need to do anything else. Revising the videos also proved easy, since they have a replace video option. Video transcripts is something I’m going to be looking into for future videos. I love the ability to be able to click on any part of the text and it brings you to the correct place in the video. Great for learning (or skimming!).

Turning Down Work

I’ve been actively turning down / referring work that I used to do. This is business consulting, web design, and SEO work. I felt it was distracting from my main specialties. I feel it has been a good choice, I feel more focused, and I’m definitely not losing any money over it.

Goals vs. Reality

All I did with my free time was work on that QuickBooks course.

Projects

A few projects I worked on this month are below.

OpenRoad Auto Group – Lexus GS event (link coming when I post the video)
Public Salon Videos
UBC Lectures
Kick for a Cure – I shot video footage, but am still working on the edit
Bookeeping training

Profit & Loss Budget vs. Actual – February 2012

Income, once again, more than budgeted. You’ll notice no money coming in from educational products, since I didn’t launch my QuickBooks Bookkeeping System Course yet.

On the expense side, the place where I didn’t spend money on was advertising. Most of this budget is meant for my education products, so you won’t see this until I start to heavily promote them.

Profit & Loss Budget vs. Actual - February 2012

Conclusion

I’m really glad I had that one extra day in February this year, so much to do.

Updates

Check out the next update Business Plan Update March 2012
Check out the previous update Business Plan Update January 2012
Check out all the updates

New Quickbooks Bookkeeping System Ready!

Greg Lam — Tue, 28 Feb 2012 23:42:05 +0000

Are you looking for QuickBooks training or a QuickBooks tutorial?

The best way to keep your financials organized is to make sure your bookkeeping is entered in a timely and consistent way. That’s where a QuickBooks bookkeeping system comes in handy.

There are many QuickBooks courses, QuickBooks training systems, QuickBooks tutorials, and guides to learn QuickBooks.

This video course introduces to you and teaches you a QuickBooks Bookkeeping System.

The difference between this bookkeeping system and regular QuickBooks educational materials is that this system is showing you how to do bookkeeping using QuickBooks, rather than simply how to use QuickBooks.

This is an important difference, since to do your bookkeeping using QuickBooks properly, you’ll need to learn how to collect all your documents, organize them, enter them in the correct order into QuickBooks, and file them. This is all to get what you need, which is your financial reports.

What’s included in the QuickBooks Bookkeeping System Course and Training Videos?

It contains:

33 videos
A 9,000+ word pdf manual that you digitally download
A flow chart taking you through the six bookkeeping steps you need to do to get your bookkeeping done in QuickBooks
A customizable bookkeeping tasks checklist

Get Started with the QuickBooks Bookkeeping System

Click the payment button below to sign up for the course for $47.

Once you make a payment via PayPal (you don’t need a PayPal account, you can pay by credit card as well), you will be forwarded back to the smallbusinessdoer.com site to register a username and password for the course so that you can sign in and begin to learn!

*** 30-Day Money Back Guarantee – If this course is not for you and you let me know within 30 days of purchase, I will give you a full refund, no questions asked (of course I’d love to know why, but it’s not necessary) ***

Preview the Course

All right, so you may want to know what exactly is the course like. Below you can see the first 6 sections of the course for free.

Outline

All right, here’s what this course covers:

1. How to use the Course
2. Course Downloads
3. Why You Need a Bookkeeping System
4. Getting Started
5. The Flow Chart
6. Step 1 – gather documents
7. Step 2 – sort into folders
8. Step 3 – enter into QuickBooks
9. Step 4 – reconcile and correct
10. Step 5 – reports and filings
11. Step 6 – store and backup
12. Making and using a Checklist/li>
13. Modifying the bookkeeping system
14. Tips
15. Feedback

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1. How to Use the Course

Everything is in video form

Every topic covered is done in video form, so you can simply watch all the videos as opposed to reading. I personally like to skim writing, so I made sure to include in writing everything that was talked about in the videos.

The one thing that the videos have over the written word is screen shots and visual examples, so it’s worth watching.

Highly recommend full screening the videos

Since there’s a lot of detail in QuickBooks, you’re best to full screen the video once you press play. It is the button on the bottom right corner of the video.

To get out of full screen mode, you press the esc button.

If you’re trying to go back or forth in the video, it is best to pause the video first and then move the cursor to the time you want to go to (then press play).

The flow chart is key!

The basis of the whole course is the flow chart. This whole course really is designed so that you’d be able to put the flow chart up on your wall, on your desk, or up on your monitor as you do your books. You don’t need to understand the flow chart at the start of this course, that’s why there’s a video talking about each step in the flow chart. You can download the flow chart from the Course Downloads section.

Navigating the Course

Since the course is one long web page, you may be doing a lot of scrolling if you have to go up and down searching for things. Two tips:

The very top of this web page has a course outline, so you can click directly on the links to take you to the section you want to. Also, at the top of each section, there’s a button you can press that will take you to the top of the page again.
On your keyboard, you can use CTRL+F (windows) Command+F (Mac) to open up a search box where you can type in any term you’re searching for and it’ll take you to each instance of where the word(s) appear. You can also use this in most computer programs, not only your web browser.

Questions

If you have questions regarding the course, leave at the very bottom of the page, and I will answer. Otherwise, you can direct any other questions directly to me at greg@smallbusinessdoer.com

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2. Course Downloads

Here are all the docs that you can use to help you follow along and execute the teachings of this course. For the PDF’s, you may want to right-click (command-click) to download.

Organizing, Entering, and Filing your Bookkeeping Documents in Quickbooks Course (PDF) – The whole course in a written PDF format, with no videos, something that you can keep on your computer or print out.
Flow Chart
Checklist and Important Dates Spreadsheets (Excel)

The downloads are available to purchasers of the course. Please buy the course to get access.

Note that the videos are not downloadable. Right now I’m not offering this since the files are quite large (since I wanted you to be able to fullscreen the videos).

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3. Why You Need a Bookkeeping System

The best way to keep your financials organized is to make sure your bookkeeping is entered in a timely and consistent way. That’s where a bookkeeping system comes in handy.

As easy as QuickBooks software is, because it needs to appeal to so many users, it can seem quite overwhelming to many. Combine this with the fact that there is more than one way to do bookkeeping and more than one way to enter transactions into QuickBooks, it can get quite confusing on how to do things properly.

The bookkeeping system I present is simply one way of doing things. After working with QuickBooks for over 10 years, I find this system makes the whole process a lot easier because it allows me to be consistent and it lowers the chance of errors.

This guide will walk you through collecting, organizing, entering, and filing all your bookkeeping documents using QuickBooks.

Doing this correctly will allow you to get what you really want, which are the financial reports. Knowing your numbers is so important to business but often doesn’t get paid attention to until there are problems. Financial reports need to be timely and accurate, and this bookkeeping system will help you be both.

So, how exactly can this bookkeeping system help me?

Here’s the problem. A lot of people pile all their bookkeeping documents into, well, a pile, and then start entering those documents into QuickBooks.

This is an inefficient and error-filled way of using QuickBooks. That’s because you’ll have to be switching back and forth between different QuickBooks windows. If you forget to switch the windows and use for example, the enter credit card charges window instead of the write checks window, then you’ve entered something incorrectly. Catching and fixing the error is time consuming.

So sure, you can enter documents a pile at a time into QuickBooks, but there’s a much better way to do it.

The solution. Pre-organize all your receipts before you enter them into QuickBooks and enter those documents in a particular order. This is because certain transactions, such as a bill payments, require a bill to be entered first before you can pay it.

Who is this course for?

For anybody who wants to do their bookkeeping in QuickBooks easier, faster, and with less errors.

This guide was designed with the beginner in mind, someone who doesn’t know bookkeeping or bookkeeping terminology.

However, the system that was designed will be useful to both QuickBooks beginners and experts. In fact, the more complicated your bookkeeping is, the more useful the system becomes.

What’s in this guide

A filing system for sorting through all your bookkeeping documents so that you can enter those documents into QuickBooks in the best way possible. It shows you which QuickBooks window to use for entering each type of bookkeeping document you will collect and in what order you should enter the documents.
A work flow that takes you from start to finish of entering your transactions to getting your financial reports.
A customizable checklist that you can use to make sure you’re doing your bookkeeping on-time and not forgetting anything.

What’s not in this guide

This guide is not a full blown course on how to use every feature in QuickBooks. Instead, it will give you a solid work flow on getting around QuickBooks quickly and efficiently.

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4. Getting Started

There are three parts to this guide.

This guide itself
A flow chart
A checklist

The goal is that after reading this guide, you can use the flow charts and checklist every time you do your bookkeeping. If you need a refresher, you can go back to this guide.

Let me first introduce you to the flow chart.

There are six steps in the bookkeeping system.

gather documents
sort into folders
enter into QuickBooks
reconcile and correct
reports and filings
store and backup

I will go through the why and how of each step after we go into the flow chart in a bit more depth.

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5. The Flow Chart

Here’s the bookkeeping flow chart.

How to use the flow chart

The chart is color coded and laid out from left to right and from top to bottom on purpose.

You do step 1 to 6, from left to right.

You enter transactions from 1 to 11 (there is no 12 and 13 because these are not entered as new transactions into QuickBooks)

You’ll notice that there are many folders that are green in color. This is because you could do number 5 before you do number 1. But, you have to do green before you do the red, because you can’t reconcile transactions before you enter transactions.

You’ll also notice that the green has two shades, light green and dark green. You can’t enter the dark green before you do the accompanying light green entry first (ex: you can’t 02 – pay a bill before you 01 – enter a bill and you can’t 06 – record a deposit before you 05 – receive payments / sales receipt).

The blue “don’t know / other” folder is for transactions that you don’t quite know how to categorize. This can be because you don’t know how the receipt was paid for, or perhaps it was paid for using multiple methods. This is a catch all for anything you don’t quite know how to deal with or that don’t fit in any of the other folders.

I put blue between the green and red for a specific reason. The green folders are documents that you know how to categorize. By entering all the known transactions first, it will leave less unknown transactions to deal with, less possibilities for your “09 – don’t know / other” folder. Think of all the transactions as pieces of a puzzle. The more pieces you can put down, the easier the puzzle becomes.

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6. Step 1 – gather documents

Gathering documents is one of the most crucial steps in bookkeeping. After all, bookkeeping is all about entering information, and if you don’t have the information, you can’t do your bookkeeping.

At the most basic form, for bookkeeping purposes, you need to gather any document that will show money going in to or out of your business’s accounts, whether it be a bank account, credit card, loan, line of credit, etc… For example, if an item shows up on your business bank statement, you need a document explaining the item.

You also need to collect documentation of any monies that have been paid with non-business accounts, but are legitimate business expenses, such as:

Expenses employees paid for themselves and need to be reimbursed for
Any thing an owner paid for using a personal debit card, credit card, or cash

Usually you are issued these bookkeeping documents in-person (ex: paper receipt) or the documents are emailed to you. However, sometimes you have to go and collect the documents yourself.

This is why I use a checklist, so that I don’t forget what document to collect and when to collect them.

For example, I have a whole section in my checklist called Download Statements. It is formatted like this:

Download Statements

Chequing Account – 1st of the month
Visa Account – 19th of the month
Paypal Account – no official statement, have to download when needed
Mastercard Account – 15th of the month

I also have a section in my checklist for places that I need to download receipts from as the documents are not physically mailed or e-mailed to me. Common charges that you may need to download on a monthly basis are:

Download Receipts

cell phone bill
shipping bill
car lease
membership payment
web hosting payment

So, the 1st step is gathering the documents. The 2nd step is sorting those documents.

Extra Info

There is an article I’ve written explaining what information the bookkeeping documents you collect should have and some other tips on gathering bookkeeping documents at http://www.smallbusinessdoer.com/what-information-should-you-collect-for-bookkeeping/

END OF THE QUICKBOOKS BOOKKEEPING SYSTEM PREVIEW

To get the rest of the course, click the payment button below.

Business Plan Update January 2012 – Yowza!

Greg Lam — Tue, 07 Feb 2012 22:56:52 +0000

Overview

Yowza! January was a lot bigger month than expected.

Essentially, my whole focus of the month was to finish my Quickbooks Bookkeeping System Video Course. I didn’t.

It’s not that I wasn’t trying. It simply takes time is about all I can say. An exceptional month of sales doesn’t help on the free time front.

Goals vs. Reality

I don’t even know now what goals I had for posts, but it was certainly more than the 2 posts below.

Projects

A few neat projects I worked on this month are below.

Site redesign

I did a site redesign on my video site at vancouvervideographer.ca, and I’ve found that’s helped with the conversions.

My site was focused on me as an individual, so I made the focus less about me and more about the work, I also tried to clean up the design and use a few more images throughout.

In the end, the conversion rate (how many people would visit my contact page) after the update shot up from 15.91% (check this) to 22.55%. That’s pretty impressive numbers as the conversion increase by 6.64% (or in better sounding numbers, I increased my conversion rate by 42%). I used Google Website Optimizer to track my stats.

Google Website Optimizer Stats

I can’t tell whether it’s the site redesign or my portfolio of videos becoming stronger that resulted in the extra conversion. I’m thinking it’s a bit of both.

I’ve felt that updating my work and showcasing my latest has really made it easier to land bigger jobs and made the whole sales process easier. When you have good work out there, you don’t have to convince the client of what you can do. They watch and they like your work or they don’t.

Success Circle

I started a success circle of two with my friend and business colleague George Verdolaga. I wanted to keep focused on my goals and give and get help on our business goals. We do a weekly call to keep-up-to-date.

Profit & Loss Budget vs. Actual – January 2012

Off the top, the biggest difference in January for me was getting a few extra self produced video contracts. Sometimes those really make or break a month for me. Overall on the income side, most categories were more than what was budgeted, which I won’t complain about.

This is in stark contrast to January 2011, for which I took in only around $3,000 in sales.

For expenses, there’s nothing too unusual. I didn’t invest much in equipment this month, so that’s almost entirely accounts for the difference between the budget and actual.

Profit & Loss Budget vs. Actual - January 2012

Conclusion

Almost done my QuickBooks Course… keep working on it!

Updates

Check out the next update Business Plan Update February 2012
Check out the previous update 2011 Biz Plan Review and 2012 Goals – Oh the Excitement!
Check out all the updates

Organizing, Entering, and Filing your Bookkeeping Documents in Quickbooks

Greg Lam — Wed, 01 Feb 2012 22:48:13 +0000

Outline All right, here’s what this course covers: 1. How to use the Course 2. Course Downloads 3. Why You Need a Bookkeeping System 4. Getting Started 5. The Flow Chart 6. Step 1 – gather documents 7. Step 2 – sort into folders 8. Step 3 – enter into QuickBooks 9. Step [...]

2011 Biz Plan Review and 2012 Goals – Oh the Excitement!

Greg Lam — Thu, 12 Jan 2012 07:00:39 +0000

Oh, the excitement!

I think you have to be somewhat of a biz nerd to be so excited to have your revised biz plan done. Man am I excited!

And no, it’s not only the relief of being finished writing the 7,000+ words.

I posted my business plan online in 2009 so that small business people would have a live case study of a real business in action. It’s what I wished I could have seen while I was in business school.

I’m so glad I did. I didn’t think the plan would be of that much interest for the first year or two, since there would be more talk than action. Where things get interesting is when you can see the results of the plan and compare the plan to reality. I now have some results in and can now feel comfortable telling people that if you’re starting a business and want to get a perspective of the process, you can learn something by seeing what I’ve done.

A quick look back

In mid-2009 I started my business career almost from scratch, after a failed attempt at running a ready-to-cook meal delivery service. I was completely lost and clueless. In that food business I had been making less than minimum wage for 3 years when you consider all the hours I was putting in (60-70 hour weeks).

After getting out of the food business, I was very apprehensive about getting into any business again, my confidence was shot and ambitions crushed. I honestly felt that I wouldn’t have a chance to run a business again, nor did I want to. So, after I closed down the ready-to-cook meal delivery service in 2009 I started applying for jobs and in the mean time was luckily able to fall back on my video production and small business skills I had acquired (that’s why I say that I had to almost start from scratch).

I felt I was lucky because I had family, former employers, and long forgotten contacts that were able to throw me work to keep my head above water. I was so thankful that I actually had work the minute I closed my business down.

After 6 months of soul searching – this would be the end of 2009 – I decided I was going back in business. This time I would be cautious, I would lower my ambitions, and I would be patient. I also wanted to document the process, since I was basically doing this from scratch, and being that a large part of what I wanted to eventually do was small business education.

I was in a weird spot where I felt I knew a lot about small business while at the same time feeling that I was also a failure at small business. Despite my planning attempts in my previous businesses, I was never quite able to hit the success at the speed I wanted to. I didn’t know if my new business, what I now call Small Business Doer, would be successful. But, I did want to try and show others thinking about starting a business the realities of starting and growing a small business. I wanted to show how you laid out a business plan and how things didn’t always work out, but that having a plan was still a valuable thing. And, sometimes things did work out.

Now, here we are, 2 years after I put my plan online in 2009 (actually I think I technically posted it in early 2010, but I was writing it in 2009). I’m excited because I’m starting to feel that I can actually be successful at business again, I’m starting to feel ambitious, I got my confidence back.

I’m also at a turning point, where I think 2012 will be a big year. I hope I’m not getting overly ambitious by thinking 2012 will be significantly better than 2011 financially. I actually surprised myself when I saw my 2012 budget numbers. I was so disbelieving that I had to run it several different way a few times to convince myself that it was a realistic budget.

I feel 2012 is the year where my business might actually become something that I envisioned when I wanted to be an entrepreneur. That’s when the business is more than myself, that it’s something that is more than “buying myself a job”. I’m finally going ahead with my smallbusinessdoer.com site plans, which is to provide small business education and actually make some money from this site. It’s the chance to reach and help many people. It’s also a year where I see my business investments paying off, after spending 2010 and 2011 planning, investing, and growing the business.

Perhaps it was good that I took a big fall in 2009, because every single year I’ve been seriously surprised at how the business has gone and fully appreciate where I’m at. Look, I’m still small potatoes, I can see a lot of people looking at the business and saying no big deal or even thinking to themselves they are glad they didn’t get into business.

2012 is the year that I might actually become a real business person… well… at least small business person.

Overview

Enough of the emotional intro, welcome to my annual update of my business plan. I will cover off:

Goals – Why are they so hard to hit?
Keeping focus
Personal life is not separate from business life
Profit & Loss – Budget vs. Actual for 2011
Profit & Loss Comparison – 2010, 2011, and 2012 (Projected)
Profit & Loss – Budget for 2012
Optimal advertising spending and product pricing
Investment in growth… at the cost of the short term
Education products
Where’s the time!
Wife is now part of the business
Conclusion

Keep in mind this is an update on my business, some things I’ve learned, as well as a plan for 2012. It’s meant for people who are either looking to get into or who are already in business to read. It’s not a business plan meant for attracting investments or getting bank loans.

Goals – Why are they so hard to hit?

These past four months (September to December 2011) made me realize something. I keep on making these goals to work on business growth items and keep on not hitting them.

This forced me to evaluate why I’m consistently not hitting my goals and made me look at my schedule and what I spend my time on. I came to the belief that there are certain items in my day that I consider non-productive or non-essential that take me away from what I want to do for the day.

There are a lot of little administrative tasks that seem to eat in my time. A phone call for a quote. A request for a meeting. A quick revision that needs to be made to a project. Sending out an invoice. Paying a bill. My kids walking into the office (I work from home). Someone needing a favour. Something breaking down. An online article that catches my eye and takes me away in an hour of click upon click investigating it further.

These are items I need to take care of, but the way I’m currently taking care of them make me feel scattered and un-productive.

Another reason why I believe I’m having a hard time hitting my goals is focus. Focus is a part of my problem, but I realize not the only problem. Even when I’m extremely focused on getting to a task in the day, certain legitimate business items can pop up and keep me from doing my goal for the day. That means that it’s more than focus, it’s that I have too much stuff and not enough time.

So, too much stuff and not enough time. This means that I’m taking on too much and have to pare down my responibilities, either by abdication or delegation. I asked myself what are the things in a day that only I can do and that are productive towards my goals. What are the things that bring in good money into the business, and what are the things that don’t. What services do I offer that I’m good at and what services do I offer that I’m okay at?

From the types of services I offer, video production is something I’m pretty specialized at it. I know what I’m doing, can provide good value to my customers, and am accordingly compensated.

For other tasks that I do in a business, such as website development, marketing strategies, search engine optimization, and business plan writing, I’m decent at, but since I don’t do it consistently, I’m finding myself doing a lot of research keeping myself up-to-date in those subject areas and not being able to charge out as much per hour since I’m not as speciliazed and proficient in those areas.

Something that motivates me to continue learning is wanting to do something in the best and most efficient way possible. I want to feel that I’m doing a good job and providing good value. For those business services mentioned above, I think doing them causes me stress since I don’t always feel that I’m doing those tasks in the best way possible, to the best of my capabilities. Sometimes I doubt myself. It can make me not look forward to doing the work which also causes stress when I think about the task at hand. It’s that uncertainty that I don’t like. In other areas of my life, such as travel, I like some uncertainty, but for these types of things it’s not my cup of tea.

Another thing to consider about my video production vs. “whole mix of biz services”, is what I can make doing them. My business services are about $40-$50 an hour whereas video is $75 an hour. It’s easy to see that more video = more money.

With the aim of having less stress, providing better value, and making more money, I’m going to focus on three areas in my business, video, bookkeeping and online education (using video as the primary teaching method). Accordingly, I’ve forwarded my gregalam.com site to smallbusinessdoer.com. My gregalam.com site was an online resume which listed everything I could do for small business.

For where to put my focus, video is a no-brainer as it’s my main source of income and I enjoy doing it.

Bookkeeping may seem out of left-field a bit, but it’s also something that I not only believe I’m good at, but enjoy doing. It’s the one part of the mix of business services that I offered that I felt I really provided something great to clients.

The bookkeeping also falls into the online education part, since I will be teaching about bookkeeping using computer software. This is very related to my main source of income, video, since a lot of my education will be provided using video.

I’m trusting that this clearer focus and integration of my business will lead to a more productive, enjoyable, and profitable business in 2012.

How Will I Keep Focus?

Regular Check-Ups
As much as evaluating my business plan each month has helped me re-evaluate and keep track of what is important to me in my business, I need a more frequent and consitent push to keep me on my goals. That’s why I’ll be looking for someone to share goals with once a week and hold me accountable.

Scheduling and Prioritizing
To help me stick to my goals, I will also start to schedule my tasks in my calendar, on a weekly and a daily basis. I’ve been working on a system to keep track of all the things that I have to do and figuring out how to prioritize and schedule them. My system is largely based off of the Getting Things Done system.

Separating business numbers and going straight to voice mail
Communication via phone, email, and text was something that caused me to lose focus.

One of the things I’ve tried so far is to separate out my business numbers, so that one goes to an automated voicemail.

A legacy business that I run is a kitchen rental business. 90% of the people calling will never rent, yet each call can cause me to lose focus and take away hours a week. By going straight to voicemail, I can get back to people at my convenience and schedule the calls better. I find that people who are truly interested will leave a message or send an email.

My facility is typically at maximum capacity, so I mostly don’t have space in any case. If the market was more competitive and my place not operating at full capacity most of the time, I don’t know if I’d follow the same strategy.

Phone notifications
Turning off my email phone notifications, but leaving my phone (voice and text) notifications on. Anyone expecting an immediate response from me will phone or text. Otherwise, a 2-4 hour reply time for an email can work. I find that the constant email notifications distracted me. Now, I need to find out if I can even do this with my phone. My first attempt to do this on my android phone failed.

Email – Unsubscribe
I unsubscribed from a lot of newsletters and e-mail lists back at the beginning of fall 2011. This may mean that I fall out of the loop, but it also may mean that I’m able to focus better on things that do really matter to me. It can be convenient to get things straight to your email box, but it’s not like I can’t get that same information by frequenting different websites at times that are convenient to me. I don’t think I get many e-mails sent to a general e-mail list that really effect my business goals.

I can tell you that I’ve been feeling a lot better since unsubscribing, but it seems to be a constant battle, as I know have a whole bunch of new newsletters to unsubscribe from. I used to ignore them, but now I purposely take the time to hit unsubscribe to e-mail lists that distract me.

Email – Turn Off
I’m going to start simply closing my e-mail client and not checking it for 1-2 hours at a time. When it’s open, I find myself constantly looking to see if I’ve received messages, even when I’m trying to do something that requires a lot of concentration.

The problem is that not only does every new email make me lose my focus, but it also holds the danger of me receiving an email that I “HAVE TO” respond to right away and take me away from the task at hand for an hour, or even worse the whole day.

I know from shooting video, where I can’t be checking my email for hours or even a day at a time, that I don’t need to have constant access to my email. The world doesn’t stop. There are certain cases where I’m expecting communication where I can leave the email open if need be. Otherwise, I’m going to try and turn it off. So far, I’ve been managing closing my email for 30 minutes to an hour at a time, and I feel it has really helped.

Getting Things Done – Email Method
One of the teachings of Getting Things Done is to triage your email. Triage is what they use in hospitals, to figure out what patients need priority care and which don’t.

For emails, the triage system is more of a categorization system. As you receive emails, you file away into different categories, and as long as they don’t require immediate attention, you can take those emails out your mind and out of your inbox.

One of the big thing changes that I made thanks to the system is using the 2-minute respond to rule. The rule is that if you can respond to an email in 2 minutes or under, respond to it right away. If you leave it in your box, you’ll have to quickly think about that email every time your eyes pass over it, wasting your attention every time that happens.

News, Facebook, twitter
When I get little bits of free time, or little bits of boredom, I often check out news and social media sites. The problem is that this net surfing can really get me caught up in things that are not part of my daily goals and simply derail me. A 5 minute pleasant distraction would turn into an hour. Just like email, there’s usually nothing happening on these sites that need to be paid attention to every hour of the day. I can survive by checking in once a day.

Personal life is not separate from business life

A big thing that was “getting in the way” of my business goals was my life. Having to eat, being tired, the family, stress, exercise, you get it. Something I didn’t account for much when charting my business goals was how my personal life would come into play. It’s a fallacy to think that personal situations can’t come in and derail what you are trying to do professionaly. This is especially true when working from home. Your family wants your attention too, and rightly so.

When I’m stressed and tired, it’s hard to work. Ignoring your personal life can work for a day or two, or even longer when you’re crunched with work. But it always comes back. For me, it’s in the form of burn out, where I just don’t want to do anything. It’s also in tense relations with the family.

That’s why I have to mention these personal things as part of my business goals, because it’ll be hard for me to do well at business if personally things aren’t doing just as well.

So, I’ve taken a business (i.e. organized and logical) approach to my personal life, by scheduling in when to wake up (actually setting alarm like most working people), what time to have the kids fed by (they’re in preschool and kindergarten so have to get them off in time), making sure there’s healthy food (good food makes you feel better), taking the time out of the day to spend with the family (is fun and reduces stress), and so on.

It’s also blending my business and personal goals. For example, I started bike riding the kids to school (it’s an under 5 minute ride for each kid, so nothing heroic). This gets me a little exercise as well as spending some times with the kids. So far, I’ve found I’m less stressed and have some energy to get started on work when I get back from the bike ride.

I’ve even started figuring in some household chores into my daily work routine. I do a lot of brain work, which makes my head tired. So, it’s actually a nice break to do something physical that doesn’t require thought, like vacuuming or doing the laundry. Little things that allow me to take a mental break. So far I’ve found that I’m processing all my thoughts as I do these chores, allowing me to come back to the task at hand ready to go.

Profit & Loss – Budget vs. Actual for 2011

Profit & Loss - Budget vs. Actual for 2011

The item that immediately catches my attention is my actual net income vs. my budgeted net income. I was $15,000 short of my goal or only achieved 77% of my goal of $66,000 in net income. This may be alarming, especially since my revenues hit 94% of it’s goal at $90,000.

The two major reasons that for the net income shortfall are that my gross profit (income – cost of goods sold) was $7,300 under budget while my expenses were $7,800 over budget. That accounts for the $15,000.

Looking at the revenue side, I got pretty close to the numbers I predicted. I think 94% isn’t bad. However, perhaps a better goal to look at it is the gross profits, that is what I make after I pay out costs that are directly related to the money from the jobs I produced, such as subcontracted work and input supplies. At 92%, it’s still not bad, but in $$ terms that’s $7,300 less profit than I was expecting, which is a lot of money.

For the expenses, there were some things that were higher, some things lower, but the biggest culprit for me going over budget was my equipment expense. I went over by $6,000. I would like to think of this as an investment into the future.

I would also like to point out that the majority of advertising and promotion expense was on my website, vancouvervideographer.ca, which if maintained with fresh content, will continue to bring in clients at no extra monetary cost to me year after year.

Interest expense at $1,527.68, was $1,527.68 more than I budgeted. You can blame this on a couple things. Spending money on equipment using credit cards instead of cash. Not collecting fast enough on my accounts receivable. Sometimes there are business expenses that you can wait to spend on, sometimes you can’t wait. Perhaps I could have waited longer here and there and avoided those charges.

Even though I ended up $15,000 less net income than I had planned, I am extremely happy with the results. For revenues, I believe I did about as well as I could have. If I had landed a couple decent size gigs, that would have made up the difference. I’m not going to agonize over that as I think the direction I went in was the right one.

For going over on expenses, that really was my equipment budget that ate it up. I’m also happy that I spent money on the equipment, so I can’t complain. I’m much better off this year than I was at the end of last year.

Profit & Loss Comparison – 2010 vs 2011

Profit and Loss - 2010 to 2012 - Actual and Projected

Looking at 2011 in comparison to 2010, there’s a couple things I’d like to highlight.

Income vs. Gross Profit – 2010 to 2011
My income in 2011 was $22,263 more than in 2010, but my gross profit was only $19,085 more than 2010. This was because I produced larger contracts that required me to work with subcontractors. For 2012, this tells me that I should focus more on gross profit than income, as looking only at income can be misleading. This also tells me that as I plan to do more larger, collaborative projects in 2012, my subcontracted expenses will make up a great percentage of my income.

Equipment – 2010 to 2011
My equipment expenditures were $9,291 more in 2011 than in 2010. This is largely because I was making investments into equipment that I could use for years to come. This was an investment into the growth of my business.

Net Income – 2010 to 2011
If one looked to hastily at my numbers, they might have saw that my income (revenues before expenses) was $22,263 more than 2010 yet my net income (revenue after expenses) was only $5,702 more than 2010. The biggest factors were those mentioned above, which were more money to subcontractors as well as a big investment in equipment.

In 2012, as you will see, I expect my expenses to actually decrease, mostly because I will be spending less on equipment. I will also see my income increase, meaning my net income will be a much more dramatic jump from 2011 to 2012 than it was from 2010 to 2011.

Profit & Loss – Budget for 2012

Budget for Profit and Loss 2012

More detail for income sources in 2012

Sources of Revenue - 2010 to 2012 (projected)

For 2012, I’ve decided to try and separate out my sources of income with more fine-grained detail. I’ve split my business services income into day-to-day bookkeeping and setup/training bookkeeping. I have a category for business consulting. I don’t plan on attracting any new clients, but expect there to be some income from existing clients. So, leaving the budget at $0 probably won’t end up being accurate. I’m using the budget as a tool of what I want to focus on, so I’ll leave it as that. The business consulting line is also a bit of a catch-all for income that doesn’t fit in the other categories.

You’ll see that there is a $14,500 income budget for educational products. In my past budgets I haven’t put this explicitly in, and I think that is a big reason I didn’t generate any revenue. By putting educational products in my budget, I know have a concrete goal for what I want to achieve.

I have a reimbursed expenses income line. That’s so I can see how much money I received from customers who were simply paying me back for something that I purchased on their behalf. Not true income.

I split my video production income into self-produced and subcontractor categories, both evenly matched at $45,000.

subcontractor vs. self-produced video work 2010 to 2012

In 2010 my video income was virtually entirely comprised of income I received as a subcontractor, being $44,000, and only a small portion was self-produced income, at $1,000.

In 2011, subcontractor income was $49,000. Self-produced income was $24,000.

In 2012, subcontractor income is budgeted at $45,000 whereas self-produced income is also budgeted at $45,000.

A large increase in income from 2011 to 2012?

I’m budgeting a 43% increase in income from 2011 to 2012 or $38,650. Here’s my reasoning:

From 2010 to 2011, the increae was 33% or $22,333. The increase is largely attributable to the $23,173 in new income that I received from self-produced videos (videos where I negotiated the contracts vs. being a subcontractor). The reason I grew in 2011 was because of my vancouvervideographer.ca website, that allowed me to gain new clients.
The great thing about gaining my own clients, is that many of them will be repeat clients, adding to the base of money to expect in 2012. If my website can bring in the same amount of $ figure worth of new clients, that would be $24,000 in new clients that I can get in 2012. For repeat clients, I feel comfortable that I will at the minimum receive half of that amount in repeat business. It may be I get the entire amount, who knows.
The other thing to consider is that my website and portfolio has increased in quality and status. I have more videos up that are higher quality, allowing me to bring in larger value contracts.

So, the quick and conservative calculation for revenue growth on the video side is:

Conservative 2012
1/2 of revenue from existing 2011 video clients = $12,000
Revenue from new 2012 clients = $24,000
Total = $36,000

Increase from 2012 over 2011 = $12,000

Expected 2012
2/3 of revenue from existing 2011 video clients = $16,000
Revenue from 2012 clients (25% increase from 2011) = $30,000
Total = $46,000

Increase from 2012 over 2011 = $22,000

I’m fairly confident with my expected 2012 self-produced video income since I know there are existing clients who are looking to repeat with more business in 2012 and my website is attracting larger and more valuable projects based off the portfolio. Back in the last part of 2010 when I acquired the website, I had a few videos in my portfolio, and had about $1,000 in sales for 4 months.

So, with a growth of approximately $20,000 on the video side, that leaves approximately $20,000 worth of growth to come from somewhere else.

I expect that growth to come from both providing bookkeeping services as well as bookkeeping video tutorials. I’m already doing the bookkeeping for 6 companies. From September 2011, my wife has joined the company to work on the bookkeeping side. This creates the opportunity to take on additional clients.

For 2012 I will be conservative and expect to grow bookkeeping by $20,000. This will be divided fairly evenly between set-up and training services and day-to-day bookkeeping services. Similar to the video business where I target local keywords such as vancouver videographer (which in turn provides web traffic that turns into sales), I will target local bookkeeping keywords such as bookkeeping vancouver with my smallbusinessdoer.com site, which thankfully has a decent online profile and authority due to the couple years of work I have put into the site.

Since my focus is shifting away from offering an array of business services and concentrating on two areas, video and bookkeeping, I will lose some of the income I was receiving for business services in 2011. I expect the losses (around $10,000) to be evened out by the sale of educational products (bookkeeping video tutorials).

Educational products is the wild card, both in income that can be generated and in time that I will spend working on it. Obviously, the more money I can generate from it, the more time I will put into it. If the educational products are successful enough, I will have to turn down some video production work so that I can continue to produce the educational products.

So, that’s the explanation behind the increase for 2012. I’ve actually been quite surpised that my growth projections have been fairly on track for the short life of my business.

Expenses Budget in 2012

For most of my 2012 budget for expenses, they are set to reflect what happened in 2011. More budget for meals and entertainment, less money for automobile, etc… Minor adjustments as well as some re-categorizeation of expenses and elimination of categories not used.

The two expense items that I really had to think about were the advertising and promotion budget and the equipment expense budget.

Advertising and Promotions Budget in 2012

At first I had the advertising and promotions budget at around $1,000 for the year. I had already built up my vancouvervideographer.ca website and my smallbusinessdoer.com site was based off people naturally finding my site. I revised my advertising and promotions budget after looking at the results from my vancouvervideographer.ca site (as well as knowing the results of advertising in my other businesses).

For vancouvervideographer.ca, 28% of all the money I took in was spent on advertising. That’s pretty high and I don’t know if it would make much sense if I had to pay that number every year. However, I don’t.

Firstly, I don’t have to spend that kind of money on repeat customers. Sure, there’s costs to retaining clients, but nothing close to the cost of acquiring them.

Secondly, my website is like a semi-permanent online billboard and magazine that I don’t have to pay to keep paying for (like in traditional media). I still have to create fresh content and keep the site up-to-date, but I don’t have to build it from scratch and pay people to come to the site. This means that any new business I get from my site in 2012 is very close to being free in terms of advertising costs.

So, if I want to grow my educational products and bookkeeping side of my business, I feel that I can afford to pay 20% to 30% of projected revenue on marketing in order to build up a base of clients. However, the educational products and bookkeeping services are two very different things, so my reasoning for spending marketing dollars on each is different.

Bookkeeping work is paid on an hourly basis and the work is done is usually done on an on-going basis, meaning that I’ll have repeat clients. So, while the initial cost of attracting a client may be 30% of the revenue brought in for the first job, it’s virtually 0% spent on jobs I get after that.

For my educational products, my cost is in developing the product, not producing. Since my delivery method is digital and online, it costs me very little to provide the product to each new client. This means that I’m able to consistently spend a decent percentage of my revenue promoting the product.

My main three methods of marketing will be:

SEO – Ranking high for targeted keywords, leading traffic to my sites
Affiliate Marketing – Paying referral fees to people who sell my products
Online advertising – Pay per click for search results or other targeted online ads

Notice, my whole advertising plan involves online methods. This is not only because I’ve found it effective, but I can track the effectiveness or ROI (return on investment) for every dollar that I spend. It is easy to quickly adjust the advertising amounts and move the money to what is working from what isn’t.

Equipment Budget

For me, equipment satisfies a few of my desires, needs, and goals.

The right equipment makes my life easier, which gives me great job satisfaction and lets me enjoy what I do. That’s good stuff.
The right equipment lets me produce high quality work, which makes me more money. Also good stuff.
The right equipment lets me be creative, by removing boundaries on equipment that can’t do what I want it to do. All good here.
The right equipment acts a safety net, whether it’s because the right equipment won’t fail on me or because the right equipment is helping me to prevent failure (backup system). Important stuff.

That’s how I think about equipment. So, the equipment budget is very important to me and it is mostly money I enjoy spending.

I spent a lot on equipment in 2011, much more than what was in my budget. So much so, that I don’t foresee needing so much money in my 2012 budget.

I’ve decided that in the 2012 budget I’ll have half the budget allocated to items I can see now that I’ll need, and leave half the budget open to items that I may need in the future.

Computer / backup system
The thing that I believe I absolutely need is a new computer / backup system. I’m starting to reach my hard drive capacity limits (due to the high storage nature of video). I need to have a good backup system that will provide a safety net in case the hard drives on my computer fail, are stolen, or are damaged in some natural disaster.

Equipment upgrades
The second set of items that I believe I’ll need to spend money on are minor equipment upgrades. I can do my job with what I have, so the equipment upgrades are not pressing, but will make the job easier and allow me to handle more situations. These would be items such as a secondary wireless microphone, lens, adapters, lens filters.

Bonus items
Some items I consider bonus items are a new desk and some new computer monitors.

I saw some standing desks that look like they could help me get a little exercise and focus while working. I have no clue if it would work out for me. At the moment, I would consider this nice to have, and if I’m doing well, or my priorities change, perhaps this is something that I could get.

The new monitors would be useful in allowing me to have more accurate colour work in my video productions. How much more accurate, I couldn’t say. 10%, 20%, 30%, 5%? I don’t think my work suffers in any way from my monitors, so that’s why it’s not a priority.

One of the reasons I love having my own business is I can make these types of budget decisions. That control really does make me happier, especially since I can tailor the money spent to suit my work style and goals. When you don’t have any money to spend, this can also work against you. I’m happy that with my type of business and my needs, I feel I have the money available to spend on what should be done. This was not always the case.

Optimal Advertising Spending and Product Pricing

How do you price a product? How much do you spend on advertising. Here’s a little example of what advertising spending can do to demand and profitability.

Sample Advertising Spend Rates

In the above case, the optimal price for me to pay out to advertise the product is 25% of the product price. Paying 50% gets me more revenue, but not enough to justify the increase over spending 25%. However, I make a lot more money by spending 25% or 50% of my revenue advertising than I do spending 10% advertising.

Now, pricing a product is tougher for me to figure out than figuring out what to spend on advertising. It’s fairly easy to adjust advertising dollars without too much risk. With product pricing, the price determines the value of the product as well as potential referrals. Customers don’t want to see the price of the product changing randomly, for no apparent reason. This doesn’t mean that you can never adjust price. But, every time you adjust the price it changes a customers perceived perception of the product.

I honestly can’t say what is the best price for the product. If I have a choice, I’d rather have 1,000 people benefit from the product than 100, even if the income in the end is the same. That’s because my goal is to help out the most amount of people possible. However, since a goal of my business is to also make money, if selling the product to 100 people made me twice the money as selling the product to 1,000 people, I’d be hard pressed not to simply sell to 100 people.

Investment in Growth… at the cost of the short term

After going through the numbers, I’m so happy I decided to invest in vancouvervideographer.ca as well as the new equipment that let me produce the videos that I needed to build my portfolio and book new work. If I had played it safe, and went with the status quo, I would not have grown in 2011. In fact, four months after purchasing the site, I was having second thoughts if I had done the smart thing, since at that point in time it had only brought in about $1,000 worth of work. 2011 proved it a wise decision as it brought in $23,000.

What I would like to say is that any extra money I made from self-produced videos was spent on the site acquisition (marketing) and equipment. So, in reality, I didn’t make any extra money in 2011 because of my self produced videos. I only made myself more work.

However, the benefits will really come to fruition in 2012. I now have the equipment, repeat clients, and new clients coming in.

The success of my video website lets me feel comfortable in spending 20 – 30% of my projected revenue on the bookkeeping side of business (both services and educational products) to gain new business. Like the video side of things, as long as the marketing is effective, it will help build up a base that will continue to feed me in the future.

I would also like to point out a caveat to these investements. This is all based on building up a client base that will continue to use my services and refer me to new customers. If I hadn’t provided quality service that gave my clients good value, the investments wouldn’t go far. So, marketing helps to start the relationship, while the quality of the services and products keep and grow the relationships.

Education Products

My online education products is the growth side of my business that I always want to work on but never seem to find the time. This income is different than video income, as it’s a product (information) that I would be selling as opposed to an hourly service. Once the product is made, the time and money spent, how much I make depends on how much I sell. If it is really good and marketed well, I can make a lot. The amount of money I can make would not be limited to how much time in a day I have but instead be limited by the amount of people willing to purchase my product.

Selling products is riskier in a way as I will be spending time and money upfront to make the product without the guarantee of sales. For the past two years I’ve studied, tested, and planned for what kind of products and marketing would work and what wouldn’t.

I know there’s a need for business education, especially education that can be easily and affordably accessed. Whether or not I have the right product fit for a big enough market will be seen. The risk is that I never make a sale, or make very little sales, and my information products were a waste of effort.

If I were younger, and less business experienced, I might be able to drop everything I’m doing and focus on the information products and take the risk that it will work. Instead I’m taking a more cautious approach by keeping my video income coming in and paying the bills while I create the information products. I also enjoy my video work and wouldn’t want to completely stop doing it.

What I will start doing is turning away the business services work that I have taken in the past that doesn’t pay as well, and just as importantly, causes me to take focus away from my goals.

Where’s the time!

I’ve mentioned this before, and I’ll say it again, there’s only so much time in a day and only so much one person can do. If you want to grow your business, you have to find ways to move beyond an hourly wage. Additionally, you must find ways to be more effective in your use of time.

One of the things I’ve been bad at accounting for is the non-revenue generating time I spend in a work day.

Small Biz Doer Work Hours

When I looked at it my revenue generating vs. non-revenue generating time spent on the business, those two figures were almost exactly the same. Crazy! That’s why I feel so unproductive! Looking at my list, anything that is not revenue-generating or content creation, I feel unproductive.

So, this gives me an idea. What if I shift what I consider non-productive items to times of the day I don’t consider my main work hours? As much as possible during the 9am to 6pm shift, I focus on the productive items. In the off hours I focus on the non-productive tasks. Most of the non-productive things are smaller tasks that can usually be done in 15 or 30 minute chunks whereas the productive stuff needs to be done in big blocks of time.

I’m going to try out a new work day schedule and see how the hours work out. The nature of my job ensures I won’t always be able to follow a set schedule, but I think this is something that I can roughly follow.

I feel that what the time I need to spend on the business is 61 hours a week.

If you look at the breakdown, it also includes lunches, breaks, and unpaid travel time to certain jobs. When I considered some regular office jobs, where people leave home at 7am and get back at 6pm, that’s 55 hours a week. So I’m not too far off of someone doing a schedule like that.

It’s hard looking at the time I spend on items and finding much that I can cut from my non-revenue generating hours. Ideally, I’d love to cut the total number of work hours down to 2,500 hours in a year. That would work out a lot better. That would be more like an average of 11 hours a day, 5 days a week, spent on work items.

I also would like to point out that my total horus needed in a year, which are 2867 hours, includes 4 weeks of vacation time and 1 week’s worth of sick / can’t work time (304 hours).

For 2013, I will be able to look at where I’m spending time, and decide if putting more focus on my educational products is more valuable than getting paid by the hour.

Looking at my time budget scares me
I have to admit, I’m a little nervous looking at my time budget. It feels like it’s too tightly scheduled. I’m feeling that I have to keep on looking at where I spend time and continue to cut down on what I can. After all, there’s only so much time in a day.

Wife is now part of the business

My wife is now part of the business. She used to work in finance departments and office administration, so it’s suitable that she’ll be doing the same thing at smallbusinessdoer.com. Having a spouse work in a small business is quite a common thing.

This give the business an opportunity to grow at a faster rate, since we can divide tasks and specialties between two people, not to mention the extra work hours available when there’s a second body.

We personally made the decision to do this for a couple reasons.

The first was the flexibility that it would allow my wife. Since we have two small kids in preschool and elementary school, it’s nice that she can take care of the kids during the day if their sick, attend school events, and work at times that are convenient to our life. This is not true for all types of small businesses and work, but with the majority of administrative and bookkeeping work, this is fairly true.

It’s also nice to have us both working from home. It’s always nice to have another body in the office. I tend to go a little crazy if I’m on my own all day. Also the commute to home is 0 hours a day!

There is risk to this as well. Obviously, if the business doesn’t do well for some reason, we’re both doing badly. It’s not as diversified as in the situation where we have two unrelated sources of income.

While starting my wife in the business, the training and integration took time and cost us money while she wasn’t working at another job. We tested the two person team out for the last four months of 2011 while we didn’t bring in any extra revenue.

2011 was definitely a loss in terms of time and money, 2012 should be decently beneficial, while 2013 would be the year that it would really pay off.

Conclusion

First off, I’m impressed if you’ve gotten this far. At 7,000+ words, I believe this is actually longer than my original business plan.

I’m feeling really good about the whole process.

Revising the plan each year, and updating each month, has forced me to think about how the business is doing and what I could be doing to do better. I also love looking at how everything has progressed and get excited about what the future may bring.

If you have any questions or comments don’t hesitate to lay them down!

Updates

Check out the next update Business Plan Update January 2012
Check out the previous update Business Plan Update December 2011 – Big Ambitions, Big Letdowns
Check out all the updates