Your accounting system should be as simple as possible. In other words, it should NOT stress you out!
That said, it’s important to understand exactly why your bookkeeping system should be simple, what that means, and why it matters.
FORM FOLLOWS FUNCTION
When I was in my early 20s, while working for what is now considered one of the most world-renowned mid-century modern furniture dealers, I learned about something called form follows function.
The concept of form follows function was originally introduced by architect Louis H. Sullivan in 1896 in regards to his approach to building skyscrapers. The concept dictated that a skyscraper’s exterior design should reflect the different interior functions.
This term became somewhat of a mantra for mid-century modern designers, who started to prioritize functionality and simplicity – this is evident in the minimalistic and elegant style of most mid-century modern architecture, furniture, and design.
As I came to understand it, form follows function asked the question:
How much can you strip away from an object while still retaining its original function?
For example: how can you make a chair as elegant and as simple as possible… while still being able to sit in it?
How can this help you have a simple bookkeeping system?
The concept of form follows function has everything to do with bookkeeping. I apply this principle to every. accounting. system. I create to this day.
I ask myself, “How can we make this system as simple, efficient, and elegant as possible? What can we strip away?”
Because when an accounting system is over-complicated two things can happen:
- There is more room for error
- People don’t want to USE it
When we are more efficient, we are less stressed. When we are more efficient, we are more PROFITABLE.
When you’re designing your accounting system (whether it be just you or you and your bookkeeper), remember to keep it simple and elegant.
How to keep your bookkeeping system simple
1. Use software
While spreadsheets, handwritten lists, and boxes of receipts can do the job when your business is in its infancy, as you start to level up and take on a higher volume of transactions, choosing the right software to help you automate your processes is essential. Check out this Instagram post on how to choose the right software.
Our personal favorite is QuickBooks Online for its capabilities to link to your bank account and automatically label transactions.
2. HAVE a system
This one feels obvious – but arguably the biggest part about having a simple bookkeeping system is making sure that you HAVE a system. If you don’t have a system you can rely on, you’ll be less likely to do your bookkeeping consistently. This can create an undercurrent of chaos in your business that you simply don’t need! Check out the Easy Bookkeeping System (which is a FABULOUS way to get a super easy, super simple system set up FAST.).
The million-dollar question – WHEN do I hire a bookkeeper? There is no one-size-fits-all answer to this question.
Some small businesses outsource bookkeeping when they achieve a certain level of revenue. Others wait until they’ve hired their first employee. Many freelancers outsource once they realize they’re in over their heads with QuickBooks Online + would rather pass off the task entirely.
Here’s a good rule of thumb: If organizing your business’ finances starts pulling your attention AWAY from the aspects of your business that are actually bringing in MONEY (aka marketing + your product/service offerings), it’s time to outsource.
4. Know when to ask for help
I often mention this when I’m giving small business advice – particularly when it comes to bookkeeping.
As mentioned, not all businesses are ready to outsource their bookkeeping. Some business owners prefer to continue managing it themselves or delegating it to an in-house team member. However, knowing when to loop in a professional (for example, when you’re actually building your bookkeeping system), can save you a lot of time down the road.
This comes into play a lot with software like QuickBooks Online. Despite my love for QBO, I am the first to admit that it’s a complicated software and can be intimidating to the uninitiated.
Sadly this means that –sometimes – setting up one wrong thing can create a whole mess that costs a lot of time and money to fix.
This is why we offer Done-For-You QuickBooks Online set-ups that we call the Very Important Bookkeeping Day, during which we create a customized, simple bookkeeping system for your business and then teach you (or a team member) how to use it.
Your bookkeeping should not stress you out.
The importance of having a simple bookkeeping system should not be overlooked. I know firsthand how many business owners stress in secret about their money not feeling organized. Remember that if you have a bookkeeping system that feels over-complicated, for the good of your business you must take action to simplify it and make adjustments.
P.S. This post contains affiliate links for awesome products we love!