by Steve Holder

Created on: May 22, 2008   Last Updated: May 29, 2008

A few small business owners really get a kick out of keeping their own books, but for the majority, accounting is a necessary evil. We track what's really important to us, like receivables or cost of materials, and of course the checkbook balance. But putting it all together into a pretty report on the first of the month is just not in our DNA. We're entrepreneurs, after all. Not accountants.

Still, we know we need that P&L and balance sheet for many good reasons beyond paying taxes. So the question boils down to, "How do I get my books done as painlessly as possible?"

Do It Yourself

Dave and his wife, Anne, have a small home-based business creating marketing materials. They work as independent consultants for larger agencies and also directly serve other small businesses. In the scramble to meet deadlines and generate new business, it seems there is never enough time for doing the books.

Because Dave and Anne operate as a corporation, they use a payroll service to pay themselves. Dave knows enough accounting to keep straightforward records in Quickbooks when he has the time. Once every month or two, when there is a lull between projects, Dave gets their books caught up. The number of transactions in their business is small enough he can generally get his P&L and balance sheet up-to-date with about one full day's effort.

When Dave has the books caught up in January or February, he creates a 30- to 40-page printout of the entire year's accounting to give his CPA for taxes. After reviewing the books, his CPA calls to discuss certain transactions that should be treated differently, and Dave takes notes to adjust the books accordingly the next time he works on them.

Do It Internally and Have an Outside Accountant

Jim has owned a small construction company for nearly two decades. Up-to-date job costing is critical to his business. He employs a secretary to answer phones, handle paperwork, and update income, expenses, payables and receivables on a daily basis. The job can sometimes be fast-paced and stressful, so he generally finds himself with a new secretary every year or two.

Over the years, Jim has found that some secretaries know bookkeeping well, and others not so well. Sometimes he would have to bring someone in as a part time temp to straighten out the records. He finally hired a consultant to set up a simple record-keeping system using spreadsheet software and not requiring any special bookkeeping knowledge to maintain.

Now, a secretary can easily keep the numbers

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