Okay, can someone explain to me why I do or don't need quickbooks?I'm starting out my own sole proprietor architecture business. I'll be my only employee, and (if things go well) I'll be sending out a handful of invoices each month. I'm working from home, so for now, my expenses willl be minimal... phone, a few supplies, quarterly taxes that's it. No payroll, no inventory.But somehow I have this crazy idea that I need some accounting software. Am I nuts? (this is all new to me)
But somehow I have this crazy idea that I need some accounting software. Am I nuts?Can you say "taxes?"You can use the shoe box method: All costs of doing business (gas, lights, phone, rent (you are going to charge yourself rent aren't you?), paper, computer disks etc.) in one box and All billing records in another shoe box. Then several times a year you can dig'em all out and add'em all up.ORYou can put it all in your computer via QuickBooks and have it all added up any time you look at it. BTW QuickBooks also keeps track of who owes you how much and for how long.
Can you say "taxes?"You can use the shoe box method: All costs of doing business (gas, lights, phone, rent (you are going to charge yourself rent aren't you?), paper, computer disks etc.) in one box and All billing records in another shoe box. Then several times a year you can dig'em all out and add'em all up.ORYou can put it all in your computer via QuickBooks and have it all added up any time you look at it. BTW QuickBooks also keeps track of who owes you how much and for how long. I'm not sure that QuickBooks is the only way to go for this. If the OP does not have any accounting software whatsoever, then I would agree that QuickBooks is probably the way to go. But if the OP already has Quicken for personal use, then I would be reluctant to upgrade to QuickBooks just for the business that he described.I do all the books and any activity having to deal with money for DH's business as a General Contractor. Like the OP, he is also a sole proprietor. As we already had Quicken, all I did was to set up categories in Quicken for the business with the appropriate sub-categories. And my sub-categories coincidentally match the categories on a Schedule C, so at the end of the year, I just run a report on DH's business category, and it spits out all the sub-categories as well. The numbers simply then go on the appropriate line for taxes.For things like outside labor, I have a subcategory by person, so I can also generate 1099's based on that, and I track their address and SSN right inside Quicken.For the invoices, I just use Word to type them up, and track them in Excel.Now, I realize this is probably more work than having QuickBooks, but it is another way to do it, and it has worked well for me for the past 5 or 6 years. The advantage to me was that I was just using software that I already had and which I already use to track our personal accounts as well as the children's accounts.I also love playing with numbers, doing the taxes, and building spreadsheets [I know - that makes me a sick person], so you have to take my opinion on this knowing that.Depending on how much the OP wants to do automatically or what software the OP already has, he could go either with QuickBooks or with Quicken.I just wanted to point out that there was another way to do this.
I've just looked at QuickBooks on Amazon - have you seen the customer reviews? Ouch!The Pro version gets a higher star rating, but still!Are there any decent alternatives?I think I looked a year ago and started using a book to keep my accounts (also good practice of the basic Financial Accounting course I'd just taken at MBA level). But now I'm finding something a bit more advanced might be required. My basic needs are similar to jmbarnes, and I'm using a Cash Basis of accounting for taxes. My customers are generally all good payers - especially my main one :-) But I do have accounts receivables, etc. that I need to keep track of. And then there's reading my writing, etc. :-)RB
My take would be if your comfortable with keeping books rather thanusing software is to do it. As you mentioned your accounting needsare minimal, no inventory , no 1099's, minor invoicing. I use quickbook pro and am fairly satisfied with the ease of use aftergetting up and running and trained. I use software as I need to put out too many invoices and manually producing and recording would take way too much time. Also being able to look up customer payment history,send open invoice reports, track expence history, could go on further.I guess your choice also depends on how much you expect to grow in the future.Good luckjohn
(you are going to charge yourself rent aren't you?)Just a minor nit to pick. You can't charge yourself rent on your tax return.--Peter
Quicken should be fine, in fact the usability is really better in quite a number of areas. Quicken has the ability to turn on some small business features which I havent tried (costs extra), but might be exactly what you need.We use quickbooks for my business, but use the reporting features like invoices, balance sheets, P&L, receivables outstanding, receivables aging etc. The budgeting in quickbooks is pretty poor, I do like the budgeting in quicken though.I use quicken 2002 deluxe for personal finances and quickbooks 2003 fot eh business.
>>Are there any decent alternatives?<<I bought QuickBooks and even attended a one-day workshop. Still got totally lost. I hated it. (Admittedly, I have little aptitude for accounting.)I have a Macintosh and bought MYOB's First Edge. It has template setups also but you can adapt them easily.MUCH, much simpler and all works from your bank register...I'm much happier. Mara
(you are going to charge yourself rent aren't you?)Just a minor nit to pick. You can't charge yourself rent on your tax return.Peter,When your business rents space from you it is a legitimate business expense paid by the business i.e. less profit to pay tax on.The monies paid to you by your business are taxable, BUT you don't pay FICA tax on that money. Needless to say the amount you charge yourself must be inline with what similar businesses in the area are charging.
When your business rents space from you it is a legitimate business expense paid by the business i.e. less profit to pay tax on.The monies paid to you by your business are taxable, BUT you don't pay FICA tax on that money. Needless to say the amount you charge yourself must be inline with what similar businesses in the area are charging. If we're talking about a schedule C, the IRS has taken the position that this is not allowed. You can't be your own landlord and move some of your profit from schedule C to schedule E.If you own the building, it should be depreciated and shown on schedule C along with the mortgage interest and property taxes.However----If you incorporate, we now have two entities: you and the corporation. And a corporation that you happen to own stock in can certainly rent it's premises from you.I'm too busy to look up references right now. If you need them quicker, perhaps someone over on the Tax Strategies board has them handy.--Peter
One piece of advice I'd give, is this...Plan as though your business will grow faster than you think (hopefully it will). Therefore, prepare systems (especially accounting) that will allow for more than expected growth, even if it means doing a little extra planning or learning now. Now is when you'll have the time, not later.Otherwise, you may someday find yourself a victim of your own success, and have a difficult time moving to and learning quickbooks (or similar) later on. As problems go, success is better than some, but I'd recommend preparing for it long before you get there.
While Quickbooks could be cumbersome to work with,I will give you the ability to track every job independently while doing the complete acounting of your business. I am sure that others accountign software could do the same, but I am not familiar with them. IMHO, it may pay off to outsource your accounting to a professional since they would keep track of any change, specially in the taxation area, and how they may affect you. And if your business is small, it would not cost you much while allowing you to concentrate in what you do instead of trying to learn another part of running a business. Furthermore, in the case of any question or audit, you already have a professional to handle it in a more understanding and efficient way that if you need to seek one at the moment of the inquiry.RPons
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