Few people like doing their accounting. It takes a very different mindset to go from the creativity and interpersonal nature of running a business to the more solitary, methodical task of dealing with figures and spreadsheets. Every successful entrepreneur also knows that, tedious as it is, diligent accounting and financial planning is vital to the success of a business.
For those of you who don’t even know how to get started with this task, here are five easy tools that can help you keep accurate financial records, plan ahead for future expenses, and maximize your profitability.
Wave is a group of apps that allows you to track your transactions, create estimates and invoices, generate receipts, and manage your payroll. Everything is free except for payroll, which varies based on the number of employees in your business. Wave is ad supported, so you will have to deal with commercials and display ads on the side, but most people would prefer that to having to pay for an app.
Wave also offers a variety of ancillary services that small businesses might find useful. The Wave Pro Network helps small businesses find professional accountants to help manage their books, and you can integrate payment options into your invoices that will allow customers to pay directly on your digital invoice.
There are other options besides Wave in this area. FreshBooks and Zoho apps offer similar functionality, minus the payroll option. Quickbooks is the largest and probably the most familiar small business accounting software. It’s not free like Wave, but it is better suited to businesses that plan to scale to hundreds of employees someday.
Revenue and profit forecasting is a necessary task. It’s a huge part of how you sell investors on your business, and it impacts the way you plan your spending and liquidity requirements. It’s a difficult task though, and often can feel like more art than science.
PlanGuru’s tools not only help you to model revenues and expenses, they integrate those inputs into larger forecasts of the balance sheet and cash flow statement. It also automatically generates key financial ratios and break-even analyses.
Plan Guru’s upfront cost can be more than some entrepreneurs want to pay, especially if you want multiple users. However, its tools are unique, and it offers a great deal of customer service and resources to help you work out its functionality. You can take a free 30-day trial to figure out if it’s worth the cost.
CalcXML: Buy or Lease Calculator
It can be a difficult decision to figure out whether to make a big capital purchase; do you take on debt to buy the asset outright, or do you lease it? Sometimes you simply don’t have access to the funds to buy an asset, but in other cases you have to weigh the costs and benefits of either option.
This decision is influenced be several factors such as interest rates, taxes, and the residual value of the asset. Calculating the total cost manually can be a difficult process.
Luckily, there are several online calculators that allow entrepreneurs to plug in the key info and see the total cost of buying or leasing an asset. CalcXML has a great calculator on their website, just put in the data and it spits out a breakdown of the costs for each method and gives you a graph to visualize the total cost either way.
FileThis: Paperless Document Storage
FileThis automatically collects and organizes bills, tax forms, receipts, and other financial documents that you need stored. Designed initially for personal use, FileThis also has premium plans that work for entrepreneurs. For $5/month, you can up to 10GB of cloud storage for documents from up to 30 different sources.
The ease of storing and locating documents can be hugely helpful when it comes to building financial statements, filing taxes, and keeping bill payments in order. Most of all, it’s just a big time saver, as it automates so many tasks you use to have to do manually.
One alternative to FileThis is, of course, paper documents, but those can easily get cluttered, and the cost of all that paper and ink can add up. Other options if you want to go the paperless route include Sohodox, Paperless, and DocStar. These services are more aimed at scanning and creating digital copies of paper documents, whereas FileThis allows you to go paperless entirely.