# Business Terms and Bookkeeping 101 [The Basics]



## VIP Vince (Jan 29, 2008)

Well, I have been coming to this forum for about a year now, and have checked the *Business and Finance *forum maybe 5 times. LOL! I have been avoiding it like the plague. 

I never went to college, and really don't know a whole lot on how to successfully operate a business. 

I know that my company will fail if I don't start to get control of what is getting spent, and what is coming in. (forgive my rookie terms  )

I started an apparel brand about a year ago, and have basically just used what goes into my account to replenish supplies and come out with new designs. I have no tracking of what I have done other than my online bank statements. I am going to go to a tax guy to help me get the 1st year sorted out, but moving forward I want to start taking control of my companies' destiny. 

I know I have a solid product, but I also know that that will not be enough. I want to learn how to keep track of every penny, and while doing so, learn business finance without having to go to school (I don't have time to commit to school, but can commit to online resources). 

I just recently purchased Quickbooks Pro (don't really know if it was in the budget or not, but I had extra $ in the bank ), and my wife sort of set it up. I am not sure if this is the only thing I should use or if I should integrate it with other systems.


*The real point of this thread is to have a place where other's in my situation, can have a place to go to learn about business resources for dummies. I would like to know:*

1.) What business finance "terms" do I need to learn the definition and application of? eg. "balance sheet", "p&l's", "Liabilities", "Cash Flow Diagrams".....etc.....

2.) What are more specific ways to stay on top of what you do as far as bookkeeping? (Do you enter your info into quickbooks, and thats it?) (How often do you do this?)

3.) Are there links to online resources, or books that I MUST READ, to help me learn the basics of how to be successful with my finances?

4.) Budgeting! How to allocate where, and what your $ is spent? (Marketing, supplies, expenses.....)


I know this all sounds very basic, and I am probably throwing the wrong terms around, but if you guys/ gals have some advice I am here to listen. I know there are plenty of other people on here that are in the same shoes as me, and it's hard to admit. I just want my company to thrive, and I know that I have a solid product.

PLEASE HELP!!!!


----------



## stuffnthingz (Oct 1, 2007)

I have done books for myself and other companies for years, using software like Quicken, Quickbooks, Bookkeeper and Excel. The absolute easiest way to "advance" your bookkeeping if you use a checkbook to pay all of your bills is a simple "ledger" system. I personally feel that software programs for a very small business, or someone who is new to business is more hassle than it is worth. I made an excel spreadsheet with 20 columns, the first three are my income columns, sales|shipping|tax then following is a set of "expense" columns. I deposit money, or pay a bill and I log that money in a column appropriate. I break out each deposit by sales, breaking it down to the three elements, sales/shipping/tax. You can pay under $200 for a ledger that is all laid out for you with the checks. I dont' pay my bills with checks, I pay online or via CC so this will not work for me, but perhaps it will work for you.

The businesses I run now are just too small to put into a bookkeeping software. It is time spent versus the return for that time. I even went back and put the books into software for 2006 and thought wow, what a waste of time for what I am getting. Excel does everything I need it to do.

If I were to ever go full time, perhaps do POS or hire an employee, any of these could change my mind. I am a developer Manager by trade so I am inclined to use software as much as possible, but truly for my business, it doesnt make sense.

Good luck! I will be watching this post for other feedback.

Also note, I use the same ledger for my home books. I have a budget that I follow and monitor using the same simple system.


----------



## VIP Vince (Jan 29, 2008)

stuffnthingz said:


> Also note, I use the same ledger for my home books. I have a budget that I follow and monitor using the same simple system.


I will also add, that my home budgeting is not that great either. I pretty much do the same thing I am doing with my business - If I have the $ I pay my bills, and whatever is left over goes towards my needs. 

Pretty sad, and hard to admit, but I really am willing to change this NOW! I have really just shunned the idea of keeping track of all of my $ because I was afraid of what I didn't know. I see now, how it's not really working.



Thanks for the advice on the Excel sheet. I think I could make that work. I also pay for everything online, but I could easily just write it down too.


----------



## Dan K (Nov 15, 2006)

None of us here at FP knew "how to run a business" either and we've learned, sometimes the easy way, sometimes the hard way, but it's happening, and it's kind of fun!!! I also have no formal education beyond high school and a few community college courses (18 years ago, yikes!).

First off, if you can afford it, try to find a bookkeeper. This is not an accountant, but someone who can do your books correctly and with more detail than you may be able to yourself. A bookkeeper will not be able to answer all of your questions, but they will be able to provide you with accurate, concise records of your business from which you can make decisions and from which you will learn a lot about your business. They will also save you valuable time that you need to run your business. In our opinion, stay the pro at what you do - print, embroider, sell shirts, or whatever it is you do - and let a pro take care of your books...

In my estimation the next level is the accountant, who would review your books and possibly advise on them professionally. Accountants usually cost a bit more, but with the business you probably need to pay one to file your taxes anyway. If that is the case and you can't afford an accountant full time, tap that accountants brain the few times you meet with them when doing taxes. Ask as many questions as you can of that accountant including something as simple as, "How do my business financials look to you?" and "Anything that you can see that we can do better?"

You could also schedule interviews with a few of these folks as you "shop around" for one, whether or not you intend to retain or hire one. During those interviews, you will learn a lot, a lot of terminology that you may not have known, and you'll start to get an idea of what they could offer you when you might be able to afford it...

We are fortunate enough to have found one office that provides us with payroll services, bookkeeping, and accounting, all under one roof, all paid on one bill. I can't tell you how much this had helped us, and how much money this has saved us. Rather than 3 offices who have to communicate with each other, they're all in the same office and know our business (the skeletal financial part of it) better than we do and can provide all encompassing answers to our questions whether they be about payroll, payroll reports and filings to the government, bookkeeping, accounting, and forecasting...

One of the best things that you can do anytime is begin to educate yourself on these topics. We've referenced Nolo many many times for great info (financial, legal, and otherwise) and great reading material. Some are free online articles, some are books you have to pay for, but it's all current and it's all valuable:

Nolo: Law Books, Legal Forms and Legal Software

Another good one is Harvard Business Review. You can read some free articles, you can purchase some (I think I've paid like $6 for LONG articles about 10 times in the last 3 years), or you can become a member, get a subscription, and get a lot of that stuff for free... These are deep reads, but you kind of just have to get into it in order to learn:

Harvard Business Review - Current Business Articles and Case Studies

I read a series of books that totally enlightened me, not that I know anything, but these books really gave me a base knowledge of the questions you ask above, and maybe MOST importantly, the lingual base in which to talk to the folks I mentioned above (bookkeeper, accountant, CPA) in their terms, which not only makes it easier to communicate with them, they understand what you're saying and vice versa, but it allows you to present yourself to these folks in a more professional manner.

So this series of books I bought came from a solicitation from HBR. The package was like $150 from HBR, but I just looked up the list of books on Amazon and bought them all, some new, some used as available for around $40 or 50 total. Here are the three books, intended to be read in this order:

"Finance for Managers" HBS Press, Harvard Business Essentials

then...

"Financial Intelligence" HBS Press, by Karen Berman and Joe Knight

then...

"Ahead of the Curve" HBS Press, by Joseph Elllis

Basically, in this order, in "Finance for Managers" you get a well thought out introduction to the basics, and most importantly terminology. Then, in "Financial Intelligence" you get a deeper look into the same things, topics, terms, and theories presented in the first book, and then some. Finally, in "Ahead of the Curve" you will learn how to use the information presented in the previous two books in order to better manage your business and predict other things that are out there in the world that will have affects on your business...

I hope this stuff helps although I did not take the time to address some of those questions myself... The moral of my story - READ!


----------



## Dan K (Nov 15, 2006)

Oh yeah. After reading these posts again let me just say one more thing as if I haven't already said enough!

All this boring (yes, I'll be honest with us) reading has trickled into my personal life and finances. The same bookkeeper and accountant we use for the business now does my personal taxes so for once in my life I KNOW they are accurate and being filed correctly and on time.

In addition to that, I have been able to apply much of what I learned from these things that were initially only business related, to my personal life and personal finances, which has also been totally valuable in many ways...


----------



## VIP Vince (Jan 29, 2008)

Dan K, THANKS! Thank you for taking the time to respond in the manner you did. I am definitely going to use all of your advice.

I am more into promotion and managing the operations. I have a true passion for that, and that is why I love my business. You just let me know that it is OK to not be the master of every aspect of my company. I think finding a bookeeper is truly something that would allow me to keep doing what I do, but also give me an opprotunity to be able to review my companies financial data, without second guessing if it was even done correctly. 

You have no idea how grateful I am for that response! I honestly haven't gotten to much attention to most of the questions I ask here, and I was hoping this thread would turn out differently!


----------



## Dan K (Nov 15, 2006)

VIP Vince said:


> Dan K, THANKS! Thank you for taking the time to respond in the manner you did.


Thank you for the kind words!



VIP Vince said:


> I am more into promotion and managing the operations.


Me too man, me too! I thought I wanted to learn the books, but boy was I wrong! We dropped like $400 on Quickbooks, started to use it, and quickly learned that even that was beyond us, at least with the amount of time we had to learn that kind of stuff while trying to make sales and crank out shirts. Turns out now, we've had the QB program for 3 years, and we don't even use it. The bookkeeper uses their own program and just reports to us.



VIP Vince said:


> it is OK to not be the master of every aspect of my company. I think finding a bookkeeper is truly something that would allow me to keep doing what I do, but also give me an opportunity to be able to review my companies financial data, without second guessing if it was even done correctly.


True dat, as they say. Those are words of wisdom...

You can hit me up via PM or email if you want...


----------

