How do we take care of the day-to-day accounting at Saunders Machine Works?
Our everyday accounting is comprised of two main things that we will cover:
- How to handle receipts, payments, and checks
- What accounting software to use
While we used to use Intuit QuickBooks, the Xero accounting software is a better fit for the shop, so we’ve been using that to manage accounting. Xero allows you to manage multiple accounts, and logging in every day and checking your transactions is a great way to ensure the only transactions going on are your own. Another great feature of Xero is that it offers free integration with your bank, meaning that you don’t have to pay another pesky monthly fee. One of our favorite features of Xero is the fact that it allows us to set rules that actually work. When a transaction comes through, we can instantly tell what the transaction was from, be it an SMW product sale or training class payment.
One downside to using Xero for accounting is its inability to easily print checks. The process takes more time than it is worth, and Chase Bank handles our checks for us behind the scenes anyways.
How to handle checks:
Our bank, Chase (and many others,) offers a free bill pay service. We decided we didn’t like the idea of checks, so when we need to pay a bill all we have to do is find the vendor on our banking website and click pay. Then, Chase prints and mails a check directly to the seller and we never have to touch a single check, or even pay for stamps!
How to handle receipts:
In the event we get a paper receipt, it gets stored in a file cabinet containing partitioned folders for each month of the year. Small paper receipts go into a manila envelope, and full size invoices or receipts are kept next to the envelope.
Aside from our daily routine, it is very important to do a monthly reconciliation. At the end of the month, we download a copy of the monthly statement. Then, make sure everything adds up when compared to your records and there are no mistakes. This is where it can get a little tricky – not everyone deposits a check immediately, and even if they did the check still takes time to clear. Because of this, your reconciliation may not match exactly and is something to watch out for. This can also happen if a transaction takes place over the end of a month, and the transaction may not clear until the first of the next month.
Remember: if you do decide to hire an accountant, make sure that they do not have the power to write checks or move money in and out of your account. You should be the only one in control of your money!