I am looking for a book that would cover accounting/bookkeeping for a very
small manufacturing business. For example, I build custom furniture. I
don't keep any materials in stock. I buy only what I need when I need it.
I have two books: one is fine for a small retail business, the other is
from a class I took back in the late '80's, and it's fine if you are
say...WMH Toolgroup (I don't remember much from that class). I have been
building custom furniture for the last year and have been tracking my
finances with Quickbooks Simple Start. It doesn't seem adequate, and I'm
not sure I'm even using it properly. Specifically, it would be nice to
have info on properly setting up my chart of accounts. I know that
visiting an accountant would be smart at some point (perhaps that point is
now), but I am on a very tight budget and was hoping to delay a little
longer. Any suggestions would be greatly appreciated.
Years ago, I found this in my local library, and it helped me:
<(Amazon.com product link shortened)(3155>
Not flashy, but very helpful.
Quickbooks, Peachtree, or even Excel spreadsheets can greatly simplify
everything you'll do. Having a local CPA do your taxes, at least at the
beginning, can also teach you a LOT!
I've found Quickbooks to be worth it's weight in gold in several small
ventures. The less time you spend on bookkeeping, the more time you can
spend on profitable activities.
Any accounting advice you get here will be worth what you paid for it. A
visit to an accountant appears to be in order, if for no other reason than
to have them steer you in the right direction.
That said, with no employees, no inventory and operating on a cash basis,
you may find that just about any software that will let you categorize your
income and expenditures for a Schedule C , plus good tax software at the end
of the year that will do things like depreciation on items that you can't
outright expense, auto mileage, etc. can be made to work in your scenario.
Some accountants may tell you otherwise, but I run two businesses using
QuickBooks, with accountant participation; and two using Quicken, with no
accountant participation, and have for years.
Basically, you have to find your comfort level for your particular
situation, but do talk to an accountant to get you started in the right
On Thu, 26 Jan 2006 11:13:22 -0600, Swingman wrote:
This is good advice. I seek out professional help in any situation I'm
not familiar with. I listen and then do what I'm most comfortable with.
In the case of accounting, my wife is a CPA so she does all my work.
However, she has lots of clients in your situation. Some have her do
monthly book keeping and end of year taxes; some have her do quarterly
statements (for the banks) and end of year taxes; for some she just
consults and helps them over rough spots, they do all the work. A good
CPA should be comfortable with any of these arrangements. I'd suggest you
consult a CPA for advice. Pick a smaller firm or a sole practitioner
with at least ten years experience and a modest office. In most cases
such firms have a more personalized service. This of course has been
my experience YMMV.
No kiddin'. Unfortunately, most of the lessons in business I have
learned have been the hard way, and usually expensive. It takes a
while to develop those skills, especially (the listening one) and 25
years ago when I opened my first company I sure thought I knew an awful
lot more than I did about business.
Now with all the laws, rules, regulations, form filling, filings, etc.,
it just isn't near as much fun as it was. I wasn't near as hard to
start the biz back in '78 as it would be today, but nonetheless, I sure
paid for my ignorance.
In the homebuilding business in many municipalities these days the tail wags
the dog to the point that the choice of who you do business with is being
usurped by the rules and regulations ... and the net results is higher costs
for everyone, and not, as was intended, better built homes.
"Portfolio of Accounting Systems for Small and Medium-Sized Businesses"
from the National Society of Public Accountants and published by
Prentice-Hall. My version which was printed in 1987 is ISBN
0-13-685305-6. I assume it has been republished since then and maybe
updated. It is written for manual systems, but the structure of a Chart
of Accounts doesn't change due to computerization.
I'd go with Quicken. We use QuickBooks Professional at work and I like
it a lot better than Great Plains or Peachtree, which we have used in
the past. I just bought a copy of Quicken with a business package
included for use at home.
Find a bookkeeper and use them for quarterly taxes, at least once.
Take a class in basic accounting (At the end of my first semester in
college accounting the instructor told us we were qualified to be
I can do books by hand and on a couple software packages but I like
Quickbooks best. I bought the Quicken for home because it is fast and
I am a retired accountant. Do you have someone to do your taxes at year
end? If so ask your bookkeeper what software to use. Quickbooks will do
just fine until you do enough business to hire a part time bookkeeper.
The most important thing about keeping books is to tell you how much
tax to pay so IRS will not come down on you.
The next most important thing the books will tell you is what doing a
job will cost you and if you made a profit or not. There are two costs
to your job, your materials and outside labor and your overhead. The
overhead is your lights, heat,insurance, depreciation or rent, truck,
gas and any other cost that goes on whether you work or not. Take all
your fixed costs for last year and divide by your total sales and you
have an overhead percentage. That is what you have to add to every job
just to break even. Then add whatever you think the traffic will bear.
Let me tell you now that cutting your price to get business does not
work. Your customers will equate cheap prices with cheap work even if
you are the best in the business.
Bill in New Mexico
QuickBooks should be more than adequate in your scenario and I too have
tried it. The version that I used was in the late 90's and like you I felt
the program was not very intuitive. For about 7 years now and operating as
a sole proprietor with no inventory I get by just fine with Quicken Home and
Office and a Spread Sheep program. Neither program will give you legal
Quickbooks more accountant friendly and blocks some common errors. Quicken
has some sweet features but isn't as "job" specific.
Peachtree suc......'s. Sorry I wasted a lot of money on it before giving up.
Lots of graphics and not as intuitive.
In my experience very few small businessmen know finance. Unless you have an
idea of capitalization, amortization, section 179, all the state and federal
rules and fees you'd be best to see an accountant and hire him for initial
setup advice and chart of accounts for your business (audits are more
expensive than accountants). Reach an agreement to come in once a year for
taxes and be able to call him and succinctly ask specific questions (think
of his time like a lawyer's). Then get a tax program to watch your tax
liability/cash flow during the year - this point is extremely important -
cash flow is king.
Quicken has a sweet feature where you can setup "escrow" accounts like a
pseudo credit card for your annualized expenses and tax liability so that
every time you start the program you know exactly what your cash position
is. QB requires a lot more manipulation. Quicken has great personal
management tools as well including stocks.
And just because he's an "accountant" doesn't mean he knows what's best for
your money - unfortunately. Learn finances. You'll be surprised how many
times you'll catch "errors". CPA is no guarrantee either. Sorry if that
hurts any feelings. You can either make money or save money - either way
improves your net worth. Good luck.
Tom Nie wrote:
<<And just because he's an "accountant" doesn't mean he knows what's
your money - unfortunately. Learn finances. You'll be surprised how
times you'll catch "errors". CPA is no guarrantee either.>>
Amen, amen, amen. My small business was too much of a bother for an
accountant I had many years ago, and due to his careless handling of my
bookeeping and taxes I wound up paying more than I should have. A
later accountant filed amended returns and we got some of it back, but
then I had to pay her to file the amended returns, also.
Some accountants like small businesses, some don't, and some don't care
what they work on. But every type of businesses have different nuances
that a good tax preparer can explore. If you are doing a simple cash
in/cash out arrangement, then you can keep you books easily, and then
find out from your fellow craftsmen whom they use and like for tax
preparation. Chances are that person will be experienced in the field
you are working in or at least a related field.
I love Quicken, and with the help of my preparer have it set up just
the way she wants it. It saves me money (her time) and effort on
taxes, reports, etc. I wouldn't worry about getting anything too much
more sophisticated until you start tracking employees, accrued
depreciation on many different tools, etc. But you do need a good
system, one that can be readily understood by those that need to look
at it. If you don't have good books, then you will be totally screwed
at one time or another for many differnet reasons, not the least being
In point to Tom's statement above, you should take any classes you can
get to make yourself more savvy and informed on your company's tax
burden and position. You should NEVER rely completely on someone else
to always do the right thing concerning your business affairs. It is
your company, your responsibility, and your baby. No one will care
about it as much as you do. And no one is as responsible for it as you
When the guys that work for me decide to take the plunge and start
their own business, I always tell them how soon they will be longing
for the days of being out on the job all day with the biggest problem
being if they have the right nails or materials, or if their is a BBQ
joint near the job site.
They never believe me when I tell them that invoicing, collections,
bookeeping, quarterly reports, year end reports and taxes take almost
as much of your time as doing the work. How soon they learn.
But on the other hand, if this is schedule C income only and you are
making a few pieces a year, I don't think you should worry too much.
One of my buddies that mows lawns does all his stuff on Quiken, and
inputs it to Turbo Tax and he is finished.
He went to the Small Business Administration's free advice council for
small businesses and found a wonderful retired CPA that go him on the
On Thu, 26 Jan 2006 16:43:16 GMT, Brian Mahaney wrote:
Well this discusion has been very informative. I think the right choice is
to see a professional. I'm clearly not up to speed on what I need to know
(despite an accounting class some years ago and several books more
recently). Thank you all for the valuable information. Now, do any of you
have advice on locating a good accountant? Should I pull out the phonebook
and start making calls? Is there a more efficient method? What do I
really want to ask them to get the answers I need. Keep in mind, I might
as well be starting from scratch here. In other words, If I get someone on
the phone, I'm not sure what I want to ask. My first thought is to explain
my situation and see what they say. I would also like to know how much
money it will cost (estimate is fine).
HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.