If you’re running a startup, keeping track of the money is of paramount importance. Either you presently do, or eventually will, want to seek financing. I suggest using QuickBooks Online to handle accounting for startups.
In the meantime it’s sweat equity, and no matter what you do you’ll need to track every penny. Learn this lesson now. It’s easy when the money is plentiful, to spend more frivolously. That’s when you need to remember how you do things today, as a startup. This experience will come in very handy throughout the rest of your life, as a startup. In short, always run your business like a startup.
I love how my friends at Intuit refer to themselves as a “30 year startup.” It tells you something about their culture, and I’ve been to their headquarters, as well as the past (and first) two QuickBooks Connect conferences. I can vouch for this. Oh and I am speaking there again this year, so be sure and register for QuickBooks Connect 2016!
When you first set up QuickBooks Online to handle accounting for startups, QuickBooks will ask you to choose an industry. Find the one that most closely matches what you do. The main purpose of this choice is that QuickBooks Online will get you started with a chart of accounts. This is where your transactions live. Every account that shows up on either the Balance Sheet, or The Profit and Loss statements are defined here.
As you begin to use QuickBooks Online to handle accounting for startups, you will find that you need to add accounts, to better describe your transactions. Then as you run reports, and compare what is on those reports to your chart of accounts, you may find there are some accounts that you don’t need. It’s easy to remove them, or make them inactive, so that they don’t clutter up your lists.
I am a big fan of keeping a clean chart of accounts. This means using broader categories. When you have too many categories, it makes the financial statements harder to read. Clients of mine know that we can take advantage of the powerful reporting capabilities that QuickBooks Online has to offer. This means I can keep the accounts simple, at the highest levels, because it is very easy to drill into an account, and sort or subtotal the details, so that I can get those details when I want them.
As a startup, it is very important to keep track of what you are contributing to the business. In this video I am going to show you how to set up those accounts, and track two things;
- Money that you put directly into the business
- Expenses that you pay for out of pocket, on behalf of the business
Putting money directly into the business is a simple transaction, as you’ll see in the video.
The other thing that happens more often, than not, is that startups use personal resources to pay for business expenses, before they have had the chance to organize the business. In other words, you’re paying for things from your personal bank account, in order to get the business up and running. This is normal, and it is very much possible to accommodate this using QuickBooks Online to handle accounting for startups.
Assuming you are not an accountant, my goal here is to give you the understanding for using QuickBooks Online to handle accounting for startups, based on not entering journal entries. This means we’ll want to set up the accounts, and use the forms that QuickBooks Online provides, in order to get the accounting done in the simplest, yet most efficient way possible.
Watch the video above and learn how to use QuickBooks Online to handle accounting for startups. Then post your questions and comments below.