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

#1

Post by r_singh » Sun, Jan 07, 2024, 2:17 PM UTC

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!

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

#2

Post by pettycashstash2 » Sun, Jan 07, 2024, 2:22 PM UTC

Quickbooks

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

#3

Post by syedkarim » Sun, Jan 07, 2024, 3:26 PM UTC

Quickbooks

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

#4

Post by mergy » Sun, Jan 07, 2024, 3:32 PM UTC

Freshbooks

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

#5

Post by iamflimflam1 » Sun, Jan 07, 2024, 3:52 PM UTC

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?

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

#6

Post by r_singh » Sun, Jan 07, 2024, 3:59 PM UTC

iamflimflam1 wrote: post #5

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…

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.

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

#7

Post by brandonaaron » Sun, Jan 07, 2024, 4:09 PM UTC

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.

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

#8

Post by iamflimflam1 » Sun, Jan 07, 2024, 5:15 PM UTC

r_singh wrote: post #6

iamflimflam1 wrote: post #5

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…

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…

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)

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

#9

Post by chris-orgmenta » Sun, Jan 07, 2024, 5:42 PM UTC

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.

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

#10

Post by multjoy » Sun, Jan 07, 2024, 6:19 PM UTC

r_singh wrote: post #6

iamflimflam1 wrote: post #5

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…

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…

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.