How to Run Your Bookkeeping Online

Small business owners are aware that bookkeeping online is a good alternative to hiring a full time bookkeeper. With a full time accountant, you would have to pay salaries, benefits and other costs like office space, health insurance and the like. And if you’re outsourcing your bookkeeping to an accounting firm, sometimes you don’t have a full grasp of the company’s finances.

Here are a few online applications you can use to manage your own bookkeeping online. These cater to different types of businesses and professions.

Invoicing and payments

Freelancers, small business owners and online professionals know the importance of being able to bill clients in a timely and convenient way. Online applications like Freshbooks (http://www.freshbooks.com) can take care of managing billing and invoicing clients either through email or through printed-out invoices that are sent by Freshbooks through mail. Freshbooks can also help you manage projects by tracking milestones, time spent by you or employees or contractors, and schedules.

One other advantage of web apps like Freshbooks is that when you send an online invoice, the client has the option to pay for these conveniently through various online means like PayPal, credit card and the like, all from within the Freshbooks system. Freshbooks costs $14 to $149 per month, depending on the number of clients you need to manage, but it also has a free account for freelancers and small businesses who only need to manage up to three clients.

Expense tracking

Another important aspect of bookkeeping online is accounting for company expenses. While Freshbooks can also handle expenses, online professionals swear by Shoeboxed (http://www.shoeboxed.com), which lets you simplify your accounting of receipts. You simply mail these over to Shoeboxed, and they scan, upload and categorize these, and turn these into electronic form for easy management. The electronic form can then be sorted and categorized into different ways, and saved into various popular formats like Excel, PDF, Quicken and Outright (to be discussed later in this article), should you need these for tax accounting.

You have the option of scanning the receipts yourself, if you’re worried about them getting lost in the mail. Shoeboxed costs from $9.95 per month for light users up to $49.95 monthly for heavy business users.

Tax accounting

Accounting for tax payables is one of the biggest headaches that a small business usually faces every tax season. Of course, you can pay an accountant to take care of these, but you can also do these yourself online. Outright (http://www.outright.com) is a web application that makes tax accounting simple.

Outright will track your income and expenses for every quarter, and will compute your payables based on these. The service will send you reminders when payments are due. The main advantage of using Outright is that the service can import data from Freshbooks and Shoeboxed (discussed above) on a regular basis, so you don’t have to re-input everything. However, if you wish to keep your books online only for taxpaying purposes, then you can also manually input your income and expenses on Outright. Outright also gives you the option to grant access to a third-party accountant, to help you audit your books, and if any adjustments are needed.

In all, the lowest packages for these three services would cost you about $25 per month, which is really a small price to pay for a more efficient, Internet-based accounting system. Again, hiring a full-time accountant might be an expensive option, so if you’re confident enough to handle your own bookkeeping, then you can use these web applications, and perhaps just have an accountant audit these once or twice a year, to make sure you are getting your figures right.