Money Matters is a short series designed to provide some quick financial wake-up calls and information to freelancers and the self-employed. You can find each article in the series here:
Part 1: Declaring PayPal Income
Part 2: Hiding Money Online
Part 3: Subcontractors, Outsourcing and Taxes
Part 4: Legal Business Entities
Part 5: Accounting for Freelancers
Part 6: 13 Resources for the Self-Employed
Have you ever had a sinking, terrified feeling in the pit of your stomach? I have, and it happened the day my accountant said, “Write down all your income and expenses and bring that to me.”
I looked up at the hutch over my desk, where countless slips of paper stuffed into a corner reigned. I glanced over at my letter holder overflowing with credit card statements. Then I looked at my email, where the names of well over a hundred clients sat waiting. “Okay…”
Hesitantly, I opened my PayPal account and clicked on History. I downloaded it to an Excel sheet, thinking to sort the data neatly within 15 minutes.
That’s about the point where I realized that my current system of tracking expenses and income was in deep, deep trouble.
I didn’t have a system. I didn’t know my gross income for the year. I didn’t know the total of my expenses. A glance over at my back room door reminded me there was a box full of paperwork, bills and statements that hid even more deductible expenses I needed to tally up.
Enter accounting software. I researched for days. (I’m like that.) I compared options, I tested out trials, I shopped around for the lowest prices. I read reviews and recommendations and I perused small business sites. I found software that might’ve been good, but it wasn’t good for Canadians. Joy. “What software do you recommend,” I asked my accountant, and Acomba was the answer, a monster of a system that cost thousands of dollars. Great His second choice was Simply Accounting, and since I’d heard the name tossed around the Internet favorably, I went with it.
One month later, I was asking for my money back. Let’s just say that James is no accounting wizard, and Simply Accounting is definitely a program for those in the know. I had to hire a specialist to set up my business and even then, the whole damned thing was complicated. I’m not even sure why the program is called Simply Accounting, because simple didn’t even factor into the experience.
I needed dummy-proof, simple accounting software that let me enter information quickly, easily, and that gave me a general overlook at the health of my business finances.
Quickbooks was the answer.
In less than one hour, I had set up my own company information and was happily entering new orders, payments and expenses. In less than a week of applied effort, I had most of my year neatly laid out for me on the screen – income, expenses, profit analysis, financial statements, GST reporting, tax filing… it was all mine.
I’m still in bliss. Now, any time that I need a figure, one click gives me the answer. I can track who owes me money, who I need to pay, how many clients I have and how much each has brought in. I make my accountant beautiful printouts that he loves. He’s started recommending Quickbooks to other small business owners as well.
While the initial cost of forking out the money to buy this software might make any self-employed worker think twice, the expense is worth it. It’s tax deductible, it’s a one-time expense, and if you look at the benefits, it’s a wise decision.