Ah, gosh, I see that the document I saved here is not really applicable to new, or simpler businesses. Let me see if I can rework things a bit.
Bookkeeping Goals
Basically, I think most folks want at least these few things taken care of by their bookkeeping. Of course, your business, or your preferences might have you adding much more to this list.
easy totals for filing year-end income taxes (or any other taxes)easy totals for being able to tell if your business is doing well (or if not, where the shortfalls or overages have come from)proper bookkeeping to avoid fines, penalties, audit protection, etc.
Audit Protection
Isn't this what we want, less stress if an audit occurs? Here's what I recommend so that you will
"look golden" if you are ever audited. (In some areas of business, it's not "if" you are ever audited, but "when.")
have separate bank (and credit card/loan, if applicable) accounts for business and personal activityreconcile business accounts to the statement each monthproperly record cash activity or personal accounts used for business activityhave ALL deposits properly identified (in whatever bookkeeping system you choose)avoid "miscellaneous" or other overly vague terms in your books
Bookkeeping Options/Recommendations
A. bank account download or reportsB. Excel (or other app) spreadsheet, checkbook register, or columnar pad/registerC. bookkeeping software
A. bank account download or reports
--.csv files - The simplest option here is to download a .csv file of all your banking activity (in your business bank account, of course) from your online bank account. A .csv file is a "comma separated values" file and is usually available to download from online from almost every bank these days. .csv files easily convert to Excel files, or Google Sheets or other app files for categorizing, running totals, etc. Just note that some banks only have limited time frames available online, so you might need to download regularly over the year before the data is no longer (easily) available. This is less common than it used to be, but is still a thing with smaller banks or small credit unions.
--other bank reporting - a lot of online banking is getting more and more sophisticated. Some online bank systems allow you to categorize income and expense within your own banking profile/online register and even set up budgets or analyze spending and cash flow. This often allows for reporting directly from your bank's online system, or having categories download with your other banking data (whether in .csv or other formats). If you use your bank's online billpay to pay your expenses, this often comes with a lot of reporting options as well.
--aggregate bank sites - in the past, I worked briefly with mint.com and looked at other free online services that will take all your online accounts and create one place for your to total and review them. For example, you might have a checking account with Bank of Mullein, and credit card with Daffodil Credit Services, and a savings account with Dragonfly Online Bank. Setting them all up through something like mint.com (which I haven't even checked to see if it's still operating) would give you totals for all three.
Note that it's still important to reconcile to the bank statement for these methods and note this somehow in your records.
B. Excel (or other app) spreadsheet, checkbook register, or columnar pad/register
However you get your data in to Excel, some kind of register, or even an old-school columnar pad, this is completely serviceable for a lot of small businesses. Again, reconcile to the statement each month.
C. bookkeeping software
When is it a good idea to level up to bookkeeping software and what are some options?
Here's when I recommend leveling up to bookkeeping software:
you have customers who owe you money over a period of time that needs tracking, invoices, and/or statements ("receivables")you owe bills that need to be tracked over a period of time ("payables")you have inventory to trackyou have multiple loans or equity sources, or other tax reporting requirements like payroll or sales tax
Here are some software options to consider and a few of their rough price points:
QuickBooks (QB) for PC desktop - note that the Mac version is being discontinued - can be as low at $5-7 per month (U.S.)QuickBooks Online (QBO) - more like $30-40 per month (U.S.)FreshBooks - also an online version - might be similarly priced as QuickBooks OnlineWave.com - free and claims it will always be freeXero.com - probably similar in price to QBO and FreshBooks
QuickBooks has almost held a monopoly on the small business bookkeeping software marketplace. It is what I know best and what most small business people know. When QB branched out in to QBO, the online version was really, really awful. They have since improved it quite a bit, though it's still a desktop software attempting to be reworked in to online software. While I have not worked with Wave or Xero, they were designed to be online applications, so I imagine they might work better than QBO. I have worked with Wave recently, and it's okay. It would suffice for simple enough businesses. (Here's
an article on why a startup dumped Wave for Xero.)
Similar to going from a spreadsheet to software, IMHO, there are a few key reasons to go from a desktop app to an online app:
you want to make invoices on the go or onsite (at a client's or at a job site) with your smart deviceyou and/or your employees want to access the books from multiple devices (without a server or LAN, or WAN)you have remote employees or other helpers (accountants, consultants, board members, etc.) who also need access to the current/live books