Bookkeeping for lean startups (Part 2)

Read part one.

The accounting industry thrives on entrepreneurs who are not diligent in filing and bookkeeping. As such, they waste too much money and time keeping their accounts in order rather than working on their product.

In light of this, I’ve written this two-part series to help entrepreneurs adopting the lean start-up methodology to take the right approach to accounting.

Here are five easy things you can do to cut your year-end bookkeeping bill by 30 percent in your first year of business.

1. Don’t buy it

Examine every fixed asset you buy, and ask this question: ‘Does this asset directly contribute to revenue?’ iPads are cool, but will it make my product better? Before buying large ticket items, think twice.

Do call your accountant. Ask: “I’m about to buy $3,000 in computer gear. What should I do?”

He or she might tell you to try leasing instead of making an outright purchase. If you lease it, you can expense the computer monthly and maintain cashflow.

2.Avoid cheque payments

Cheques first appeared in 352 BC, and should have stayed there. They are really an outdated financial instrument.

Cheques are blocked. Issuers make mistakes which cause the bank to reject the cheque.

Cheques bounce. It is easy for the issuer to overdraw the account.

Cheques go missing. Cheques can be lost in the mail, or at the clearing house.

If you do need to write cheques, write them only once a month. Gather all the invoices you wish to pay by cheque, write all the cheques at once for each invoice like a production line, and then carefully eyeball each cheque for mistakes.

Record on the cheque stubs details like the supplier name, amount and description. This makes it easier to track the cheque in the future.
If you receive cheques, record the cheque number and issuer details. Better still, scan the front of the cheque with your camera phone and send the scan to the cloud.

3. Favor bank transfers and credit cards

4. Reconcile your bank statements

5. Move to cloud computing