How to Set Up a Small Business Accounting System

Many small business owners (including myself) tend to focus on the more glamourous aspects of their business like sales and marketing and product/service development.  As a result, accounting (poor misunderstood accounting) does not get the attention it deserve.  In addition to the perception that an accounting system does not necessarily add value, they can also be a little intimidating.  However, setting up an accounting system does not have to be complicated and should be considered essential for any small business or self employed owner (the reasons for which will be covered in my next post). A good software tends to handle most of the complexity of accounting as long as the data is entered accurately.

The primary steps in setting up an accounting system are represented below:

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Guidance on QST Change in 2013 and Updating your Accounting Software

For the third year in a row, the Quebec Sales Tax (QST) will be changing.  Fortunately, the change is not to the rate, which effectively remains the same, but rather an effort to harmonize the QST with the GST. Consequently, the most significant change is the method by which the rate is calculated.

In the past, the QST used to be calculated on the total sale plus GST.  As a result the published rate was 9.5% while the effective rate was actually 9.975%.  The harmonization of the GST and the QST requires that the QST be charged on the sale amount only, without the GST.  As such the published rate and the effective rate will both be 9.975%.  This is illustrated below:

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3 Invoicing Options for Small Businesses and Freelancers

If you are running a business of any size, it is essential that you have a system in place that allows you to get paid.   A system can range in sophistication from a handwritten receipt to a software generated invoice which is part of an entity wide CRM system.  To meet this need there are countless invoicing solutions available and many billions of dollars are spent annually on setting up systems to meet each business’ unique needs. 

Almost all accounting software geared to small business owners and freelancers have built-in invoicing modules that integrate with your accounting.  This is very useful when doing your books as you don’t have to worry about entering your invoicing manually and it allows you to track your accounts receivable and deposits into your bank account.  There are also invoicing solutions that are not full-fledged accounting systems; however they usually integrate with the more popular software.

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How to Update Wave Accounting for the 2012 QST Rate Increase

As of January 1st, 2012 the Quebec Sales Tax (QST Rate) which had gone up from 7.5% to 8.5% on January 1, 2011 will now increase to 9.5%.  The effective sales tax in Quebec will go up from 13.925% to 14.975%.  Since QST is calculated on the net amount + GST, the rate is not 14.5% but 14.975% .  In other words the effective QST rate is 9.75%.  Business owners will need to update their invoicing and accounting systems accordingly to ensure that the rate is properly reflected.

If you are using Wave Accounting, the update to the rates is fairly straightforward, with one little quirk.  Since Wave, unlike Quickbooks, does not allow for the QST to be calculated on the GST, the effective rate has to entered manually.  This is done as follows:

To update Quickbooks for the tax rate increase, please see “Updating Quickbooks for the 2011 QST Increase”.  The procedure is essentially identical except for rates.

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19 Features to Consider When Selecting Small Business Accounting Software

When selecting accounting software for your small business it helps to have an understanding of what you want your accounting system to do for you.  This involves analysing the key aspects of your business, determining what you must have and what you would like to have.  Then, like any good cost benefit analysis, narrow it down to what works within your price point.  Below is a checklist of questions you should ask yourself about your business financial needs before selecting a software:

Cost:

Assessing how much the software is going to cost you is perhaps the most important consideration.  Some accounting software are free, some charge a one time fee and some are based on monthly or annual (recurring) billing.

Platform /Apps:

Determining whether you need your accounting software to work on a Windows or Mac platform or whether you would like to access it from the cloud can be an important consideration.  For example Quickbooks Canada does not currently offer their software for Macs or online. 

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Quickbooks Online Banking: Setting Up, Deleting Matched Transactions and Manually Uploading Web Connect or Excel Files

Using online banking can be real time saver for businesses with numerous bank transactions.  It is primarily a tool to help you reconcile your bank accounts by matching the transactions that have already been entered in QuickBooks.  It helps to avoid the painstaking process of checking each transaction against your bank statement and the maddening frustration when you something goes wrong and you have to redo it. 
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4 Alternatives for Preparing Your Small Business Payroll

Paying employees (or yourself) requires more than just knowing the amount that you are going to pay.  The Canadian tax authorities requires that employers calculate a variety of taxes on the salaries paid, remit them to the federal and provincial governments and prepare annual reports demonstrating that the calculations are correct and all amounts have been paid.  This can be a lot of work for business owners whose time is more valuably spent generating sales and building their businesses.  Luckily there are many options that help simplify and guide business owners through the process:
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Is Wave Accounting Software a Good Fit Your Small Business

Most small business owners understand, in theory, that they should have an accounting system.  The problem arises when trying to select accounting software when often you are not really sure what your accounting software should do.      Every business has its own unique accounting and reporting needs.  The ideal accounting software should be able to record your transactions, report on them and provide for analysis on the different facets of your business.  If you are a freelancer or a small service provider, who prefers to do their own accounting, and is looking for a simple and cost effective accounting solution it is definitely worth taking a look at Wave Accounting.
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13 Ways an Effective Accounting System Can Improve Business Decisions

An accounting system can be an extremely powerful tool for business owners.  When well-structured , according to the specific needs of the business,  it converts raw data into a format that actually tells a story about your business and can allow for insights that are essential to optimum decision making (the magic of debits and credits).  The balance sheet is a snapshot at a specific date, while the profit and loss is more of a narrative.  It provides feedback on how your business is doing and communicates what you need to do in the future.  Some of the information that can be gleaned is discussed below: 

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Is QuickBooks the Right Accounting Software for Your Small Business?

The search for accounting software can be a confusing and overwhelming process.  A Google search for “small business accounting software” yields 6.75 million results.   Trying to get recommendations from other business owners often results in passionate discussions about why a particular program is great while another one sucks.  Your accountant might point you in the right direction, but will sometimes recommend a program that they are comfortable with using, but might be too technical and not necessarily be the best solution for you.  With so many choices out there, it can be difficult to know what to do.

If you are seriously contemplating purchasing or replacing your accounting software you have undoubtedly heard of QuickBooks.  Intuit (the corporate entity behind QuickBooks) has brilliantly extended their reach to the point where the large majority of small businesses use their program in one form or another.  Some people love it, some tolerate it and some actively seek out alternatives.  This article is meant to provide some insight on whether QuickBooks is the right choice for your small business:

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3 Online Accounting Software Options for Small Business

As cloud computing gains in popularity, the availability of online accounting software continues to grow.  Many small business owners want a software that has an intuitive and easy-to-use interface  that allows them to bill customers, enter expenses and check their bank balances,.  We also want to be able to access from anywhere (you never know when the desire to do your accounting, strikes!)  I have looked at 3 cost effective, multi functional alternatives below:

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