Automate Your Bookkeeping
As a freelancer, it's important to focus as much of your time as possible on the work you have or getting the work you need. And that means minimizing administrative tasks. Take bookkeeping, for example.
Bookkeeping is critical for maximizing tax deductions and monitoring the overall health of your business, but it's a royal pain. In this post I'll show you how to automate bookkeeping tasks so you can stay focused on existing jobs while marketing your talents.
Decide on a bookkeeping system
Many people still hand-write their income and expenses in a notebook or Excel spreadsheet and then type up invoices in Word or a similar program. This can work just fine if you don't work a lot of jobs. If, however, you find yourself with multiple clients, invoices and expense reports, you will spend more and more of your time trying to keep everything together. A dedicated, automated bookkeeping system and/or bookkeeper is a necessity at this point.
For years Quickbooks has been the lord and master of small business accounting software. But for me it was just too expensive, too complicated, and not Mac-friendly. And for most independent freelancers without the need for payroll it's just too big and bulky.
Use online accounting tools
After trying several Mac-based programs I decided to take my bookkeeping online. This was a big decision, since going online with something as private as bookkeeping meant possible exposure to the outside world. If you go this route, you must be confident in the security of the online solution and have a backup plan such as the ability to export whatever you enter into the system.
I've been using online invoicing software for three years and am very happy with it so far. I started with Blinksale, which was a good start. At the time all it did was create invoices and run simple reports. I still think it's a great solution for anyone who wants an easy invoicing program that works.
Two years ago I moved over to Freshbooks. I wanted to integrate time tracking, estimates, richer reporting and some other features into my setup. A few friends were using Freshbooks so I decided to give it a try. However, I still needed a simple online cash accounting system. That's when I found Outright.com.
Integrate before you automate
While Freshbooks includes expense reporting, it's a little more involved than Outright. Outright integrates seamlessly with Freshbooks and has beautiful reporting features. I can run a profit/loss statement at the press of a button. I can run monthly, quarterly and annual reports just as fast. And I can quickly see who my highest paying customers are and where I need to cut expenses. In many respects, Outright has become the digital dashboard for my business.
And the best part is Outright is free. At least right now. Freshbooks and Blinksale are free to start, but as you get more clients/invoices you'll need to pay a monthly fee. There are many other free and online options as well.
Automating the system
The biggest challenge with automating any software solution is actually getting the data into the system. How do you automate that? This is where a system plus a virtual assistant can really help.
I run my entire business using two dedicated credit cards and Paypal so there's always a paper trail. At the end of the month I download my statements into an encrypted Excel sheet and send it to my VA for entry into Outright. Using this system, my total time each month for bookkeeping is about 15 minutes.
Is it perfect? No. Is it expensive? It depends on your perspective. The monthly cost of Freshbooks plus my VA's time is around $35. For me it's a great value. It's cheaper than a bookkeeper, I can check the pulse of my business at any time and am free to pursue existing projects and opportunities.
Do you think automating your bookkeeping is worth doing or not? How would you do it differently? Please leave your thoughts in the comments.