How Should I Keep Books?

Many accountants have very specific requirements for how the company books are kept. I'm like that algebra teacher you always wished you had—I'm looking for the answers and don't have much concern for how we get there. The main issues are how much talent you have, how much time you have, and how much money you have. And the complexity. Obviously, larger companies require more sophisticated systems than one person businesses. And reporting requirements for corporations are more complex than sole proprietors.

The simplest is the Domebook or some similar variant. You can get them for about $20 at your office supply store of choice, it's simple, a column to record money in and a column for money out, and a place to summarize it in a self-made profit and loss statement. It'll take some time and a calculator, but gives you feedback as to how you're doing and where your money's going, and I can use it just fine at tax time.

Next up is using Excel on a computer device. I can help you create an easy spreadsheet to record all transactions, ins and outs, on one page, that totals out the way we want it to. Simple. Don't need a calculator for this one…I use Excel for much of my own accounting work since it's easily customizable, the files are tiny (I even carry Excel files on my Palm!), and quick to transfer between computers. Oh, and easy to fix when you mess something up.

Finally, Quickbooks. No, just because you own Quickbooks doesn't make you an accountant, or even give you a shot at getting it right. Like having a socket set in the garage, it can get you in trouble when you take out the wrong bolt. And what do you do when you need a screwdriver? So QB is for the right client, who has some ability and time, and able to handle the added complexity. Make no mistake, it's an excellent accounting system. And it IS an accounting system. So having and follow procedures consistently is mandatory, and my involvement is necessary as well to ensure that things are as they should be for year end. It'll cost more to buy, install, and get trained on, and maintain…but can be very effective for the clients who are up for it.

Realize that keeping books isn't just about filing tax returns. If that's your belief, then we need to talk. We need information in order to run our businesses profitably, to make good decisions along the way, how to price our sales and services, control costs, and assess tax moves that we need to make along the way. Filing the return is the final step of a lot of work. So whatever we use, it must give both you and me the information that we need.