Ask HN: Small business owners on HN. How do you do your accounts?

[r_singh]

I'm a small business owner that has ignored doing accounts since the start of my business. I know some older successful business owners and they have repeatedly advised me to not take doing accounts and growing positive cash flow lightly.

I'm an engineer, I like building and always felt that I should spend more time delivering value than counting what I am making. Also, I was trying to solve for growing revenue rather than reducing cost—which I still think is what I should prioritise.

However, this is my 4th year in business and with expenses rising and having to manage payroll. I have begun to realise that I have not been the most realistic with my choices at times. I appreciate the wisdom of the older folks who have been successful at creating wealth from running a business and think it’s important to get the basics right.

I want to start putting in effort to do my accounts regularly and would love if I could have a checklist of sorts which I could just tick off regularly rather than it being a never ending project.

I'm curious for how successful business owners on HN manage this?

Does any have a template they like to use? What questions should one’s accounts system be able to answer? What type of decisions does it help you make?

Appreciate any help!

[ricardonunez]

I use waveapp, I try everything else and I it worked the best for me. Fresh books is good too. Do not use quickbooks, their web version is buggy, slow and is and ads machine to sell you more services.

[dhruvkar → ricardonunez]

I use waveapps for my 1 person company as well.

Are you using it for a larger operation? Does it scale well?

[unmole]

I use a locally hosted ERPNext instance. It's opensource, endlessly customizable, and has a workable API. It's also quirky and a bit annoying at times but it beats having to deal with the limitations, ever-changing quirks and annoyances of SaaS offerings.

[dhruvkar → unmole]

Interesting.

How big is the operation for which you're doing accounts this way?

[unmole → dhruvkar]

The operation is little more than a hobby with less than 200 orders a month. I tried to automate the boring stuff so I only need to spend 15-20 minutes a month on book keeping and GST filing.

[iamflimflam1]

I’m not sure how this is possible? Don’t you need to submit accounts every year and pay corporation tax?

Certainly in the U.K. small businesses with a turnover under a certain amount can have their accounts signed off by a chartered accountant and then submitted to companies house.

Over a certain amount accounts have to be audited.

Day to day - cash flow is the most important thing to any business. Can you meet your outgoings, what is your burn rate. Being able to predict several months into the future with some degree of certainty is very useful.

How much cash will be in the bank at the end of each month over the next 6-12 months.

If our prediction is wrong, why are they wrong? What assumptions are we making that are incorrect?

If you are burning cash, what is the runway? How many months before fund raising is needed?

[r_singh → iamflimflam1]

A contract accountant prepares my balance sheet for tax purposes.

Business is cash flow positive.At any point, I know how much I have and can spend. However, I don't have any system to update info on expenses and revenue regularly that would allow me to see any sort of pattern. My expenses were close to nil compared to revenue until this year. So I could get away with no effort on it.

Thanks for the tips on the kind of questions I need to be able to answer. I agree that it is very important.

[iamflimflam1 → r_singh]

Probably worth asking the accountant what software they recommend. Xero is very popular with small businesses and accountants.

If you have a lot of transactions then a part time or full time bookkeeper can be a good investment.

Most accounting software that I’m aware of don’t really do much in the way of predicting cash flow. A lot of CFOs for small businesses end up with fairly hokey spreadsheets that attempt to model things along with various scenarios (hiring plans, contract wins etc)

[multjoy → r_singh]

I use Xero, having switched from Quickbooks which was fucking opaque.

Your accountant will also be able to use Xero which I suspect they will appreciate.

You can also link it to bank accounts and credit cards, which makes reconciling very easy.

[tonyedgecombe → iamflimflam1]

>Certainly in the U.K. small businesses with a turnover under a certain amount can have their accounts signed off by a chartered accountant and then submitted to companies house.

For very small businesses you can handle it all yourself with the help of an HMRC tool.

https://www.unbiased.co.uk/discover/tax-business/running-a-b...

[iamflimflam1 → tonyedgecombe]

I didn’t know that - very useful!

[grepfru_it]

Back when I ran a VPS, I used weberp which turned into odoo. I’ve used vTiger as well. I have also used a custom erp tool that tied into my infrastructure accounting. This was 10+ years ago.

These tools are great, they allowed me to see instant balance standing and allowed me to do forecasting on my reports. VTiger was really great because my costs were directly tied to project management which allowed me to predict costs way more accurately than my competitors.

As great as that was, it could not ingest bills automagically nor was the format consumable by my accountant. Every month I would spend 8-16 hours updating bills manually. Every year end I would spend 20-30 hours to export my data into excel to send to my cpa. These hours shrunk by half before I sold the business but I never went back to a DIY/OSS approach for accounting again, instead I relied heavily on the OG Quickbooks desktop app.

I don’t know what I would use today, likely salesforce or something similar

[chris-orgmenta]

Xero. I would take Xero over Quickbooks/Intuit etc. any day. And I have clients from 1pax-100pax on it with far fewer issues than those struggling with Myob etc.

Or Waveapps would be my second choice, but I haven't explored how it handles local taxes.

[brandonaaron]

We started off with Quickbooks 10 years ago. Switched to Xero about a few years after that and have been using Xero ever since. I don’t recall the reasons for switching but Xero has been fine for a small dev shop.

[hn30000]

I used a semi-scripted workflow in google sheets until things got too complicated. After that, quickbooks.

[sandreas]

I've heard good things about invoiceninja[1], but for my small business, I use a small a markdown git repository and a php script to generate pdfs out of the following file format:

data/timetracking/<year>/<customer>/timetracking.md

  # Customer
  ```
  John Doe
  Mainstreet 5
  10001 New York
  My project to work on
  ```

  # Time tracking

  2023-02-27
  - 17.52-18:41 A project task
  - 18.42-19.49 Yet another project task

  2023-02-28
  - 11.52-12:11 Something else
  - 16.43-19.01 And even more
  - 00.05-00.00 Refund

With this structure I can build PDFs by parsing markdown all calculated and branded with my logo. But you can also see a good overview in the most markdown Wysiwygs or Gitwebs. On the last page of my invoice I automatically add a tasks summary listing for every task I worked on. It's simple, can be edited with vim or within the development environment, can be `grep`-ed and still pretty flexible (as you see you can even do refunds). For my little business this is enough...

[1]: https://www.invoiceninja.org/

[ezekg]

I used Quickbooks until it became too much for me to do myself. Now I use Bench, and they do my bookkeeping and taxes.

[javicrespo1]

I trust a proffesional to do all my accounts. I prefer to focus 100% on my business and outsource it.

[pettycashstash2]

Quickbooks

[p0d]

Xero and give accountant access

[rkagerer]

Old version of QuickBooks that's still a desktop app and hails from before its enshitiffication. Along with a small little utility I made which grabs exchange rates from https://fx.sauder.ubc.ca/ and autopopulates certain transaction information.

Also a fair bit of Excel for certain things that are more practical to do separately and put in as summary entries. E.g. I have custom Excel app (VBA/form) for rapidly reconciling credit card and banking expenses and tying in the correct image from a bulk set of receipts that I've scanned.

[mergy]

Freshbooks

[syedkarim]

Quickbooks