How to Use QuickBooks Online to Handle Accounting for Startups

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.

Accounting for Startups – Creating Reports in Google Sheets

Over the past few weeks, I’ve been showing you how, as a startup, you can develop a system for keeping track of your accounting, that costs you absolutely nothing. Every good accounting system provides for you to input data, for one ultimate purpose – to get data out of the system. Simply put, this is your “reports” area.

In this video I took a bunch of sample data from a sample QuickBooks desktop company file, and populated it into my template. Now we’re going to see how we can run some reports in Google Sheets, using Pivot Tables. Don’t let the pivot tables scare you. I am going to show you how easy, they actually are, to create and manage!

Think about the columns in the “register.” Now imagine being able to decide, which columns you want as your rows, and which, as your columns, so you can analyze the data. You want to see your expenses, as the rows, and the months as the columns? We can do that. Then we can further sub-divide the columns by year. Next we can add the names as a row underneath each expense, so we can see expenses by vendor in the report. You can’t get reporting this powerful in any accounting system I’ve used, and I’ve used many!

Watch the video to see what this looks like.

After you are comfortable with how Google Sheets can be set up, you may want to consider a 1:1 session with me to help get you set up.

Then, when you think you have the budget to spring for the accounting software, we’ll take a look next an Accounting for Startups, using QuickBooks Online.

Want this template? Get it here:


Accounting For Startups – How to Create Drop Down Menus in Google Sheets

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You may be wondering, why this is important. There are two major reasons why it’s important to create drop down menus in Google Sheets, when you’re using Google Sheets in Accounting for Startups.

You want to make sure certain things are consistent. A name for example. We don’t want typo’s creating different versions of the same name. That would result in information being incomplete when we try to report on the activity for a particular name.

The other reason, is it saves time on data entry. Rather than having to type the same thing, over, and over, you can choose it, in a click.

I’m also going to show you, how to use a lookup, to bring in additional information. In the previous segment, on Bootstrapping your Accounting with Google Sheets, I laid out the columns for you. Next to the “Name” column, we had “Name Type.” We’re going to create this, and then use a vlookup formula, so that when you choose a name, from the list, it’s type will be brought in, automatically. This will save time, and also minimize the chances of data entry errors.


Accounting for Startups – Expanding Your Business Model

Now That you have the beginning of a timeline laid out, with some of your expenses, you’re going to want to know how you can expand on any of these line items. In other words, a single line to describe how you come up with the monthly figure may not be enough.

Using Google Sheets, you can lay out a model with all of the detail you need, to have a clear picture of the direction you’re headed in.

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Take the computer Equipment. I put in a rough estimate of spending $10,000 on computer equipment in the first month of operation. It’s probably a good idea, to itemize the equipment – what you need, and how it adds up to the $10,000. This way it looks more, than just a guess. In fact, it could be based on very specific research, going on line, itemizing, and pricing out what you need.

In this video, I used the Software Developer cost line item as the example. If you need more than one developer, then you will definitely want to list out the different developers, and how much each of them needs to be paid. You might have a software engineer, and then some people who report to that person, at lower salaries.

What you’ll learn in this video, is how you can break out any line item, into as much detail as you need – line by line, and month by month. You can be very specific about line items that will impact your cash flow in a particular month.

With this phase of development, your business model will start to evolve into an incredibly useful tool. By this time, you should have plenty of ideas for how you can build out your own version.

Don’t forget, that you can get a copy of the Google Sheets template, by requesting it, using the Contact Seth form right here on the site.

Next let’s take a look at how to record your accounting transactions using Google Sheets.


Accounting for Startups

So you’ve got a startup? You’re either going to need capital, or you’ve already got it. If you’ve already got it, then you need a strategy for how to use it, so you don’t blow it, before your product is ready to go to market. My series on Accounting for Startups will help you put together the information you need to get the financing, as well as manage it, once you have it.

If you have a startup, you will need a strategy for managing your costs and VC Funding

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This was inspired, in part, by Gary Vaynerchuk’s Ask Gary Vee Episode 197 on 43North, Pitching, Investing & Scaling Your Company:

The first thing we’ll need to do is, put together the picture of what you need to spend money on. Let’s say you’re a software developer with the next amazing app coming to market. In the beginning, and long beyond, you’ll want to bootstrap it. This means spending the absolute bare minimum you have to.

You’re going to need e-mail, and this day and age it makes sense to use Google Apps for Work. This is made more so true, when you consider that you have access to all of the google office apps, like Google Docs, and Google Sheets. You can start off with free Gmail accounts if you need to, so it’s all free.

I highly recommend getting into a product like QuickBooks Online, as soon as possible. If you can’t swing the cost, then Google Sheets will be your next best option, for tracking the financial accounting for your startup.

Before you have anything to track, I want you to start thinking in terms of laying out a model for what it will cost to run your business, and get that app developed. How long will it take, and what will it cost, between now and then?

With these numbers in place, you have a better chance of getting financing, earlier on, as long as they are conservative.

In this first video I am going to start you off with something very basic, so you can begin to think about, and layout what the costs will be.

Then we’ll take this a step or two further, and lay it all out on a timeline, so start seeing, both the costs, and the monthly cash flow needs. This is where accounting for startups, starts. Then we’ll start to look at how you can track your initial accounting using Google Sheets. You can go quite a distance this way, and even get some great reporting from it.

Eventually the time will come, when you will need to use some real accounting software, and when it does, I’ll be here to show you how to use QuickBooks Online for Startups.

Now let’s look at how to develop your business model, and take it to the next level.