How Business Accounting Works

Software or Shoe Box?

An early question you'll want to answer is whether to set up a manual system or purchase a software program. You might think that your small, sideline business doesn't merit a software program that looks, from the splashy box, like it could run the government of the District of Columbia. Think again. Let's say you cater weddings on weekends, one a week. The maximum events you'll do in a year will be 52. That sounds manageable from a shoe box. But you purchase meats here, cheeses there, and the wine is shipped in. You use some for Sally's wedding, the rest for Sue's. Sally's mom needs to pay you in three installments, and you've gotten so busy you can't remember if the last check came in. Did you write it down? Where?

Software can simplify your bookkeeping by avoiding double (or triple) entries of data. You log it in here and the system will put it there, where you'll need it another day. It will tally sums and group numbers for you, saving endless hours on the adding machine. Software will help you set up procedures for handling the endless flow of paper that your business generates. But, you'll need a system that ensures that Sally's payment was recorded, whether you put that system in a shoe box or into your computer.