There are Many Ways You Could Monitor Your Business Revenue and Expenses
When you are deciding how to keep track of all your business expenses and income, you have a lot of choices. Some methods may work better for you than others, depending on your preferences, knowledge and skills, and the size of your business. It pays to know as much as you can before deciding which one to use. Would the traditional pen and pencil method work for you, or would you feel more comfortable with a spreadsheet? Maybe accounting software would work best for your business. Just knowing as much as you can about each method can help you make a wise decision. There are some things you need to include in your business budget, such as income and expenses–just to start.
The Pen and Pencil Method
Some people prefer the old fashioned pen and pencil method for a variety of reasons. It is cheaper and easier to set up. Some people don't like computers. Using a pen and pencil with paper can be more private. It is easy to adapt it to whatever system you want to use and to make changes.
Some business people, however, don't like such an old fashioned system in this day when computers are so popular. To use such a system for all accounting, even for a tiny business, can be extremely time consuming. It is also extremely easy to lose old records and extremely hard to keep track of how spending has changed over time.
Some have found that while it is possible to keep track of all the money their business has spent and income received with a pen and pencil, their books can be better organized with another system. It is also easier to pay staff and vendors. Electronic methods of tracking expenses can also reduce human error and catch mistakes in seconds. Computer systems also allow a business to set up purchase orders with their vendors, providing what some consider to be another advantage of accounting software compared to a pen and pencil method.
Many businesses have found accounting software works the best to track their budgets. There are a variety of programs which can be used, including Peachtree Accounting, Quicken, Microsoft Office Accounting Professional, and Quickbooks.
Many businesses have chosen to use Peachtree Accounting, and the software has been popular among small businesses for years. It allows users to follow expenses, create invoices, track expenses, monitor receivables and track inventory. Business owners like the fact that it works well with the most popular tax preparation software. It also can be used to create customer invoices, inventory sheets, and budget worksheets.
Microsoft Office Accounting Professional is used by small businesses, households, and the self-employed. Many like the fact it works well with Microsoft Excel, PowerPoint, Microsoft Project, and other Microsoft programs. Some do not like the fact that they believe it does not work well for those with inventory management requirements and extensive time reporting.
Many like MYOB Premier Accounting because it is so easy to use the many forms which apply to small businesses and can be used simply to make invoices or budgets. Some do not believe its online banking features are strong, but many businesses use this software.
Others like Quickbooks, which can be used to create budgets and print invoices. It also works well with a variety of tax software packages.
Another popular software option is Quicken, which can be used to track where money from a business is going, shows business profit and loss easily, and brings all accounts into one place.
When looking for accounting software most business owners want a program that is easy to use, provides help and support such as user manuals and help files, email and phone support, an accounts receivable method, accounts payable, banking services, and the ability to manage the company payroll, to name only a few desired features.
Some businesses, especially small businesses, prefer spreadsheets to track business expenses rather than specialized accounting software. Even though the accounting software may be cheap, there might be other expenses involved, including more RAM for the computer, a faster processor speed, and more hard drive memory. It might take more space on the computer for backup. With a spreadsheet, one might be able to save everything to a flash drive. Even though accounting software is designed for non-accountants, such programs could be more difficult for those who are not accountants. Using a spreadsheet might be faster and easier in this case.
It can be simple to use a spreadsheet, such as Excel or OpenOffice. It can be as simple to establish a basic budget for a business as inputting such categories as sales revenue, investment and interest income, advertising, accounting expenses, credit card fees, bank service fees, taxes, health insurance, hiring expenses, inventory, office purchases, and other typical business expenses and income. Expenses and income should be categorized separately. There could be one row which lists the budgeted amount for each item and another which lists actual expenses. A third row could list the difference, and it is easy to use Excel to create a formula which would automatically show the difference when both the budgeted amount and actual cost of an item are listed.
It is also possible to create graphs in a spreadsheet program such as Excel, OpenOffice or Google Docs.
Pick What Will Work for You
When you have considered your strengths, knowledge, abilities, the costs necessary to track expenses, the size of your business and other factors, you should be able to pick from among the different ways to track a business budget that works best for you.
Image Credit: Crystal Project Computer , by Everaldo Coelho, GNU Lesser General Public License
Author Unknown, Establishing a Proper Accounts Payable System, https://www.businessknowledgesource.com/smallbusiness/establishing_a_proper_accounts_payable_system_031853.html
Bonnie Conrad, Accounting and Budget Software, https://smallbusiness.chron.com/accounting-budget-software-3825.html
Kaye Morris, The Disadvantages of Using Accounting Software, https://smallbusiness.chron.com/disadvantages-using-accounting-software-3823.html