The Neat Company

THE NEAT COMPANY SELECT MEDIA COVERAGE HIGHLIGHTS 1H 2022

TABLE OF CONTENTS: Entrepreneur: Finding the Right Solution for Your Bookkeeping Needs PYMNTS.com: Neat Co. Adds Features to Bookkeeping Platform for Small Business Construction Executive: How to Keep Track of Construction Business Expenses AccountingWEB.com: New Neat Capabilities Enhance Financial Management Contractor Magazine: Bookkeeping Tips for Plumbing Business Owners Modern Professional: Advice For Managing the Books from Someone Who Knows Small Business Currents: Top 5 Business Expenses Every Small Business Owner Should Track Construction Business Owner: How to Assess Your Company’s Financial Health & Simplify Expense Tracking Smart Hustle: How Accounting Is (Finally) Catching Up to What Today’s Entrepreneurs Need Young Upstarts: How Young Entrepreneurs Can Use Accounting to Generate Small Business Bliss Startup Nation: Keeping Books for a Small Business …Without Spreadsheets AccountingWEB.com: A Tax Checklist All Small Business Clients Need PC Magazine: NeatBooks Review

Finding the Right Solution for Your Bookkeeping Needs You’re not in business to do bookkeeping, but you’re not in business without it, either.

By: Garrett Baird | June 2, 2022 As a small business, you don’t want multiple systems taking care of your bookkeeping, invoicing and financial documents. Perhaps you create your invoices in spreadsheets or word-processing documents, eyeball expenses in online banking and maintain your employee records in an HR folder in the cloud. Some data may be in a file hosting service, while others are password-protected locally on your computer.

It can be confusing to others who may need to work with those documents — and for you to lose track of what is where. When you need that information come tax time or for a loan application, you may need to reference those scattered documents. That can take forever to find, and there’s a real risk of losing data or even using the wrong data.

If you’ve yet to encounter any serious errors or problems handling your own bookkeeping, you may be tempted to maintain the status quo. However, your financial organization needs will continue to grow more complicated as time passes. Your business may grow wildly, multiplying the number of things to track and complicating your routine. Or, if you haven’t been paying much attention to bookkeeping, you’re probably tempting fate.

Related: Five Bookkeeping Tips for Business Owners To address your needs, you could hire a bookkeeper to organize and track all of your business finances. You could also hire an accountant to organize and track your business recordkeeping.

Or you could have all your files, invoices, transactions, bank accounts, customer payments and credit cards flow into one easy-to-use financial management system. Such a system saves time by automatically parsing through your documents or receipts. You can scan and upload everything to a central digital location, capturing essential information without ever having to think about it. No spreadsheet does that on its own. Such a system would be automatic and uncomplicated, instantly searchable on all content and would make it easy to analyze information and make decisions based on that analysis.

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Gartner, a technology research and consulting firm, examined process automation in accounting and discovered that 89% of general accounting tasks were highly automatable.

Such a system would organize your data while reducing or eliminating the time you spend manually entering data. It would make it easy to identify discrepancies in your records without annoying and time-consuming searches in physical files and journals, spreadsheets, documents and boxes of receipts. Most importantly, you’d have a clear picture of your business — and financial control while spending the least amount of your time bookkeeping.

Seek the ideal solution Several providers offer automated solutions for financial management, available for both desktops and mobile apps. They simplify the process of organizing and automating your small business bookkeeping, including invoicing and document management.

Look for cloud storage for your financial documents, which reduces clutter while boosting efficiency. It’s especially helpful when files can be scanned or captured on a mobile device and uploaded to the cloud.

There, the documents are processed and reconciled, and you can even generate reports instantly.

Related: How Entrepreneurs Can Manage Their Business Finances With Success Automated invoicing that creates and tracks your branded invoices and receives payments is another capability that should be of interest to you. Offering your customers electronic payment options speed your time to cash significantly with no more trips to the mailbox or bank branch. And, if you link to your bank account and credit cards, your transactions populate seamlessly while providing you reports on money in and money out.

Some platforms offer bank-level security, as well, with all data encrypted in transit and stored in secure databases. Another great feature you can find with financial management software is the ability to securely share files and comment on documents with the accountant who does your taxes without the need for large email attachments.

When selecting a financial management platform, look for one whose all-in-one solutions for small teams and sole proprietors don’t require extensive accounting knowledge.

Live customer support and setup assistance would be a great plus, too. You and your employees will save time and energy while automating the production of critical finanBroadpath

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cial documents that require analysis like P&Ls, cash flow statements, balance sheets, and expense reports. If the platform enables your data to be searched, having all your data quickly accessible and generating automated reports will mean you’ll spend less time entering data or running down receipts, invoices, and bank statements, and more time growing your business.

In the end, one solution — without spreadsheets and accordion files — means that you can spend less time managing your books. You’re not in business to do bookkeeping, but you’re not in business without bookkeeping.

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Neat Co. Adds Features to Bookkeeping Platform for Small Business The cameras are available for pre-order and will begin shipping later this month.

ByPYMNTS | May 4, 2022

The Neat Company, which develops bookkeeping automation and document management tools for small businesses, has upgraded it financial management platform, a Neat press release said.

The press release said the new capabilities include more mobile features, simplifying the creation and management of invoices, giving a central view all bank accounts across financial institutions, and organize expenses and transactions. They can also edit account names, add notes and keep up with vendors, customers and bookkeeping tasks.

Other updates will improve transactions reporting, documents imaging and editing, report exporting by PDF and data exporting in CSV files.

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“When I was a small business owner, I saw firsthand how bookkeeping can seem like a distraction, and learned that traditional small business accounting software can feel overwhelming, while homegrown spreadsheets were both limiting and time-consuming,” explains Garrett Baird, president and CEO of The Neat Company. “Neat recognized that, too, and has condensed and clarified the bookkeeping process into an uncomplicated and easy-to-use all-in-one platform designed specifically for small businesses.”

See also: Finally, a Small Business Accounting Automation Startup, Raises $95M PYMNTS wrote that another company working with accounting and finances, Finally, had raised $95 million in a funding round.

That money will be used to bolster the company’s workforce and debut a new corporate charge card to help out with small businesses.

Finally Co-Founder and CEO Felix Rodriguez called it “daunting” to run a small business, with various tasks like bookkeeping often distracting from actually running the business.

So he said the goal of Finally was to keep supporting small businesses.

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How to Keep Track of Construction Business Expenses By: Garrett Baird | May 23, 2022 Not properly tracking construction expenses—or failing to track them at all—can lead to everything from late materials deliveries to bankruptcy. As contractors focus on what they’re building, they must make time to properly account for expenses.

The What and Why of Tracking Expenses Construction bids rely on accurate costs, and construction profitability thrives on accurate budgeting. Inflation will likely affect that in 2022. Contractors hoping to complete projects with available funds and without complaints from clients or lenders will need to be on top of all costs every day.

Every contractor needs to file estimated quarterly taxes throughout the year on the way to paying annual taxes based on the full year. Precision in recording expenses for each project helps with calculating and paying the right estimated taxes. Accuracy also can Broadpath

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lower overall tax liability. Without receipts to verify costs, those costs cannot be deducted against revenue for purposes of filing annual taxes.

Beyond that, meticulous recordkeeping provides the data needed for making stronger business decisions throughout the year. A contractor able to rely on real-time figures instead of estimates—or desperately seeking to find those figures on a moment’s notice— can make the fastest and most informed choice about new materials, project alterations and more. Accurate records let contractors plan for workforce-size adjustments when appropriate, make informed lease/buy decisions about equipment or even add new facilities.

Key Expense Categories to Track A contractor seeking a quick overview of expenses may choose to pay attention to a small, key group rather than work through multiple pages of notebook or spreadsheet data. These categories provide a representative snapshot of money going out in any time period and include: • Phone and internet costs; • Location costs (such as moving between jobsites and the home office, delivering materials to jobsites and hauling refuse from them); • Assets such as vehicles, construction equipment and office equipment; • Payroll and related costs, whether for subcontractors or employees (these are complicated and offer the biggest opportunity to run afoul of government agencies because of withholding and reporting requirements); and • Business use of non-business property (usually for a smaller contractor using a personal vehicle or dedicating part of a home for business use).

How to Most Effectively Track Expenses Every construction business should have its own dedicated bank account(s) and credit card(s) to avoid mixing personal and business expenses. Doing so makes it easier to understand cash flow and identify expenses that can be reduced or eliminated.

While a small contractor can track expenses with an accounting lined notebook or a spreadsheet, this is rarely effective. Even hiring someone to manage the books may not be the sole solution (although it can free principals and key employees to spend more Broadpath

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time managing the actual construction work and developing new business). In a growing or already-substantial business with many invoices, projects, subcontractors and other expenses to track, a holistic financial management platform—that embraces bookkeeping, invoicing and financial document management—is the most effective method. It frequently comes with default bookkeeping categories installed, precluding the need to build a system from scratch; any categories unique to a business usually require simple edits. Scanning options allow receipts and invoices be processed and worked with immediately. When based in the cloud, such software is accessible from an office and a mobile device. Software that links with business bank account(s) and credit card(s) can even provide insights (for instance, identifying top expense categories) that can be leveraged to maximize cash flow or to drive business growth.

In the end, building a contracting business is not much different than its construction projects. The smoothest projects require a good blueprint, ensure that all of the people and materials come together when needed, and don’t rely on eyeballing the job. No contracting business should toss its paper receipts in a box or store its digital receipts in an email or random computer folder. It is preferable to digitize them into a centralized system that seamlessly matches them to the proper accounting category, banking details and credit-card information. This is the best way to obtain a complete picture of any contracting business.

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New Neat Capabilities Enhance Financial Management The Neat Company, a small business bookkeeping automation and document management company, has added several new capabilities to its financial management platform.

By: Seth Fineberg | May 4th 2022 The Neat Company now gives users even more options with respect to exporting their financial data, and more capabilities available through its mobile app.

With these latest enhancements, Neat continues to try and simplify small business bookkeeping by making their platform more user-friendly, intuitive, and versatile.

Key new capabilities added to Neat include: Enhanced Mobile Updates. The Neat mobile app has a streamlined look and feel, and the process of creating and managing invoices from the mobile app has been made simpler – from creating and sending an invoice in just a few taps to a one-tap reminder to pay. Customers can now centrally view all their bank accounts (even across financial institutions) on mobile and pick through a variety of expense categories to organize their transactions.

They can also edit the name of their connected accounts so it’s easier to identify, assign specific vendors to each transaction, and add custom notes/reminders to their imported items. This mobile app update enables customers to better keep up with their bookkeeping tasks while on the go – reducing or eliminating a pile of “to do” list items at month end.

Transactions Reporting. New transaction reports, quickly generated from the “Reports” Dashboard, give customers a snapshot of what has been going in and out of their accounts. Once run, the reports can be quickly emailed to partners/colleagues, or its contents downloaded for further analysis. Other Neat accounting reports include profit and loss, balance sheet, cash flow, expense report, spending detail, tax category, spending summary, and sales tax.

Image Improvements. Images of documents, receipts, invoices, and other uploaded items can now be viewed and edited in a large preview window. This makes reviewing items and

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navigating between them faster than ever. Customers can now also view sample versions of invoices to become more familiar with the invoicing feature.

Report Exporting. New functionality makes it even faster to send PDF versions of financial reports from Neat with a custom message to one or multiple recipients.

Data Exporting. Transaction data can be exported as a CSV file from Neat making it easier to see, view, and filter transactions for matching or filing outside of Neat.

These Neat enhancements are in support of The Neat Company’s mission to deliver all-inone financial management software for its customers. Neat is currently priced at $288 for an annual subscription ($24/month) or $29 month to month.

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Bookkeeping Tips for Plumbing Business Owners Knowing how much money your business spends and where it’s spent is the key to making strong financial decisions

By Garrett Baird, President & CEO of The Neat Company | June 7, 2022 Would you prefer to encounter a skunk in a crawl space or snake out a hair clog longer than you are tall instead of handling bookkeeping for your plumbing business? If that’s you, this article should go a long way toward helping you learn what to keep track of, make a solid plan for making your records consistent and ready for tax time and, ultimately, keep your bookkeeping gunk-free.

Track all your expenses You can’t measure what you aren’t keeping track of. It’s no secret that running a plumbing business incurs a lot of necessary costs, such as tools, vehicles, payroll, office space, and advertising expenses. Knowing how much money your business spends and where it’s spent is the key to making strong financial decisions.

While it’s essential to document those expenses meticulously, that level of precision and accuracy can easily be achieved if you follow a few tricks.

Don’t mix business and personal expenses When you’re so often running from one home plumbing emergency to another—especially as a small business or freelance plumber—it’s an easy thing to allow yourself to use your personal bank account and a personal credit card to make your payments. After all, you may think that your tax preparer will be able to sort out what’s what. But why spend an evening or your day off sorting receipts with a tax preparer when you can set up separate accounting systems by establishing a business bank account and obtaining a credit card to be used only for business? While you can do the extra work to identify business expenses among your personal records (or personal expenses among your business records)— and some financial software even can help you do this—your goal is to make noting both of these items as painless as possible.

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Credit card statements often categorize expenses, which will allow you to see where your money went. It’s possible that you could visit a home improvement retailer to buy something for your home as well as for your business. Using separate cards for each purchase means that the work-related item will be properly tracked for the write-off. And the credit card is way better than using cash, where you may wind up with a receipt that you lose or can’t read when it’s time to balance your books or file your taxes.

Record everything you spend on your business Bank and credit card statements are a good start, but every single penny you spend on your business should be tracked. While doing this is no lead-pipe cinch, paying attention to your business expenses will lead to a smoother tax season and more effective decisions about expanding the business, acquiring new assets like trucks, or which employees to hire and how to bill.

First, take the effort to learn which expenses are deductible. The IRS annually publishes a guide called Publication 535 if you’d like to get very, very deep into the weeds on the matter (though the 2022 version isn’t available yet). Many reliable sources simplify the list, such as this one that lists 55 small business tax deductions.

The key thing to remember is that a business expense must be both ordinary and necessary to be deductible. An ordinary expense is one that’s common in your trade or line of business. Necessary expenses are helpful and appropriate for your business. An expense doesn’t have to be indispensable to be necessary. For a plumbing contractor, this suggests a large number of items, including: • Tools • Advertising • Office Expenses • Phone and Internet • Insurance • Vehicles and Vehicle Maintenance (when 100% owned by the business and only used for business purposes) • Mileage (for 2022, that’s 58.5¢ per mile, so long as the mileage is tracked in a log) • Salaries and benefits for those working for you, including Federal Unemployment Taxes

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(FUTA), State Unemployment Taxes (SUTA), payroll processing, and payroll taxes for employees, including Social Security, Medicare taxes, and unemployment taxes.

The best way to attend to this is by doing it regularly. Some businesses track their expenses in a notebook or in a spreadsheet. An affordable financial management platform, like Neat, connects to the business bank account and credit card, and can turn your receipts, invoices, and bills into digital, searchable documents, matching them with your banking data. Such platforms also deliver precisely the kind of information your tax accountant will need to prepare and file your business taxes, which can save both time and money at tax time. Turnkey solutions exist, which can help you manage your books and see exactly where the business is in real-time, from your computer or on your mobile phone.

Look for a solution that automates essential accounting reports, such as P&Ls, cash flow statements, balance sheets, and expense reports. At the same time, the platform should make it easy to look at your cash balance, total sales, and your most important expenses instantly. A complete financial management platform would also provide you with the ability to create and send custom-designed invoices from either your computer or a mobile device. Such a platform should also make it possible for customers to make bank transfers or credit card payments with just one tap. It would make it just as easy to move the data from whatever you’re now using. Best of all, it would be designed to be easily understood and easy to use for business owners who aren’t accounting experts.

Watch Out You can do a lot without a bookkeeper if you’ve got the right financial management platform. You should always watch out for these things (and use the software you get to help you do so): • Watch your cash flow. If your invoices are being paid late or not at all, you’re losing opportunities to grow your business (and may even find yourself unable to pay your own bills, risking your future) • Watch where your money comes from. By accepting payments by credit card and digitally, it becomes easy to track your business activity, and customers even prefer paying this way. You can even explore online payment options like bank transfers or credit/ debit card payments.

• Watch regularly. When you know the financial health of your business, you’ll be able to act on financial problems and repair them before they become a crisis.

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• Watch out for the IRS. Remember to set aside money to pay your estimated taxes when they’re due every quarter. And prepare for the possible IRS audit by keeping your records carefully. (See advice above about a financial management system.) Mike Michalowicz, author of Profit First, recommends opening a separate account just for your tax money, and making periodic deposits into it.

When you keep an eye on your business records regularly, you’ll find that you’re able to breathe a sigh of relief and spend the time you saved on the things that keep your plumbing business flush with cash. Make a house call on your own books, and choose the bookkeeping solution that works best for you.

Garrett Baird is President and CEO of The Neat Company (Neat). He joined the company in 2020 to lead its entrance into the digital accounting space, helping small business owners spend more time growing their businesses while transforming mundane bookkeeping into actionable insights.

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Advice For Managing The Books From Someone Who Knows

By Garrett Baird, President & CEO of The Neat Company | June 18, 2022

Being an entrepreneur is no easy task. Once you have the idea and have figured out the means to put a plan in motion, the hard work begins. Getting a new business or startup going is only part of the battle. The hard part is keeping that business going past the first year, or the second, or even five years down the line is where the real challenge lies. The number of new businesses that fail within the first five years is over 50%.

Getting things right early on in a business’ life is vital to its success. This means getting and maintaining customers, creating revenue, and last but not least, managing its finances. Unfortunately, accurate and efficient bookkeeping is where many new business owners struggle. Too often, people leave the details until tax time and then discover the mess they’ve created by not organizing things from the start. But there are tools available to help small businesses and startups streamline these processes.

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Who Is Garrett Baird?

Garrett Baird is the president and CEO of The Neat Company, which was founded to help small businesses get organized. They’ve been in business for over 19 years now and began with the concept of developing revolutionary hardware devices that scan receipts. This tool helps people digitize those receipts on the go and later use them to create expense reports quickly and efficiently. As the company evolved, they’ve focused more on the software side, including the ability to scan digital business documents, allowing for storing both the image and the metadata associated with each image. They’ve since branched into the world of digital bookkeeping as an extension of their historical focus on organization.

Baird’s personal experience as an entrepreneur and business owner himself and his extensive time at The Neat Company give him a unique perspective on how to harness the tools available for managing the books of a new business.

Get Started Right, Right From the Start Baird stresses the importance of getting everything lined up before starting. This includes finances and how your company will organize its expenses. He harkens back to his own time as an entrepreneur and the creation of his startup. He says he followed the footprints laid out on social media and the internet for advice on how to get started, including how to form an LLC. One of the biggest first steps entrepreneurs can take relating to organization is establishing a business bank account and using it correctly.

“Keep your expenses separate from your business expenses so that when it comes time to report on your business, you can do so easier,” Baird says. According to Baird, most people make the big mistake of not separating business expenses when they get started, making everything more complicated as time goes on. “In our experience at Neat, helping our customers separate those personal transactions from business transactions is one of our key capabilities,” he says.

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When opening that first business bank account, Baird says it’s beneficial to get a credit card associated with your business at the same time. This will aid in separating those business and personal transactions, but it also enables you to build a positive credit history for your business and earn points for business expenses. “We see the intermingling of business and personal expenses,” Baird says. “It’s a problem that we help entrepreneurs solve. But it is made easier if you get that bank account straight out of the gate.”

Know What Constitutes a Business Expense Baird reminds us that the IRS has strict rules about what qualifies as an actual business expense. There are times when a late-night trip to the grocery store might produce a receipt with expenses intermingled on a single transaction. “You can itemize the business expenses from the personal expenses,” Baird says. “There’s lots of guidance out there on interpreting what is a business expense. It’s ultimately best left to a CPA to advise you on that.”

As far as legitimate business expenses, Baird says a big mistake people make is not keeping track of those receipts. A client lunch that costs $80 might qualify, but there’s no way to track and remember that expense without a receipt. Many people will swipe the card but forget the receipt or simply throw it away. “Having that source document is critical,” Baird says. “Should you be audited and have your return examined by somebody, they’ll take every transaction, particularly those about $75, particularly those focused on things like entertainment, and seek source documentation.”

Ditch the Paper Receipts Baird says that some entrepreneurs will use the paper receipt to record information about the expense that might be called upon later. “Many people will just literally write on the receipt: who was there, their names and what companies they work for, as part of that documentation,” Baird says. Having the information documented and organized will become critical to reducing the risk of a potential audit. “Audits can be ordered at random,” Baird says. “Certain things about how your return is laid out and structured may trigger an audit.”

The Neat Company helps entrepreneurs stay organized by offering them a quick, simple way to digitize those receipts and avoid the shoebox full of paper at the end of the year.

“Instead of worrying about that piece of paper, why not just open an app, take a quick snapshot of it, and have the data extracted quickly,” Baird says. “Then be able to even match that to the transaction, that may eventually flow into a system that makes this all super easy.”

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Streamline the Process The Neat Company also offers clients an easy way to store and categorize digital receipts, like emailed receipts received after online purchases. The company offers dedicated email accounts linked to the app that automatically categorize your expenses, no matter the format.

According to Baird, streamlining processes involved with managing finances should be the goal. This allows entrepreneurs to focus on the important tasks involved with growing their business instead of wasting time pushing pieces of paper around. In addition, minimizing the amount of back-office and administrative work can be extremely beneficial in the long term.

Choosing Your Software Baird says to determine the best software program for managing finances. It’s imperative to consider the needs of the business. “What is my hierarchy of needs when I am a small business owner?” he says. Selling products and getting paid for services should be a top priority. But being able to manage expenses and become an effective bookkeeper is also vital down the line.

Choosing software that allows for electronic invoicing can be a great tool for service-based businesses. Digital invoices help to streamline the recording process, offering owners a digital record of customer interactions, a method of collecting payment, and mechanisms designed to remind customers who haven’t made that payment.

Electronic payments are also infinitely faster than waiting for a paper check to arrive.

But entrepreneurs must look for a way to manage expenses and revenue. According to Baird, having all of your expenses and corresponding receipts in one digital repository is a must. From there, being able to stream in the transactions on the other side of your spending is critical. “Connecting your bank accounts via modern transaction streaming technology is key,” Baird says. “So, if you’re not being asked to connect in your bank account with a modern bookkeeping solution, you’re probably stuck using Excel, or you’re with a provider that isn’t quite up to date yet.”

Centralize Everything According to Baird, it’s all too easy for business owners to get overwhelmed because their financial management systems are spread out and not centralized. “Oftentimes somebody will have their business bank account with one bank. They’ll have their credit card with an-

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other provider, and a third account with somebody else, maybe a business loan,” he says.

Instead, centralize all these accounts by streaming transactions into one place. Choose a program that offers owners a way to view the overall health of their business all at once, including seeing income and expenses together.

And then, it becomes about flexibility, such as the ability to quickly categorize expenses and create ease in reporting. Baird says it’s a given that bookkeeping is an essential task related to business ownership. Still, most people underestimate the tools available to them, which can help to streamline and centralize the information. While still available and acceptable, the old-fashioned ledger system and spreadsheets don’t offer owners the same opportunities as the more advanced technology out there now.

Reconciling – The Last Step For many entrepreneurs, handling the finances of their business requires the assistance of a professional accountant. Or at least it used to. Thanks to advances in technology, it has become easier and simpler for people to handle every aspect of their business finances themselves, even the complicated parts that used to be left to someone with special training. When it comes to the basics, like tracking income and expenses, many people believe they have enough knowledge to figure it out on their own. But then what?

“When I was kind of the CFO of this startup that I founded, I would set things up,” Baird says. “I would invoice my customers. I would then look at my expenses and make sure they were categorized in the right way. And then I was in this situation where I was like, ‘Am I done?’” Baird says. At this point, Baird hired a professional accountant to look things over for him. He recalls asking the accountant the same question he asked himself, and the accountant responded that he had done most of the work. The only thing left for the accountant to do was reconcile those expenses one by one.

The amount of paperwork left to the accountant at the end of the process led Baird to appreciate the simplicity of paperless reconciliation. Walking through transactions one at a time can uncover many errors, Baird says. But utilizing technology to perform this process more efficiently, and even immediately when the expense occurs, allows streamlining that makes managing the books at the end of the quarter so much easier. “You run that report, look at that dashboard,” Baird says, “These are super valuable insights that I wouldn’t have otherwise had about the health of my business and where I can potentially go from here.”

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Baird’s Top Three Practical Tips for Entrepreneurs 1. Keep it Simple One of the first steps entrepreneurs can take to help themselves manage their finances is categorizing things. To do so, many new business owners get overwhelmed and overcomplicate their methods. “We try to keep the language in our solutions as simple and straightforward as possible for somebody trying to operate a business,” Baird says. “Keep it simple with just basic categories that help explain your business and the primary buckets of spend.”

2. Utilize Digital Technology Whenever Possible Digitize your receipts, digitize invoices and payments, and digitally stream transactions from a bank account. Baird points out that the world has been slowly turning toward the digital and going paperless for many years now, and the future is going to continue that path. “You can wind up with everything digitally organized into one centralized space, very conveniently.”

3. Be Confident in Your Abilities Baird knows that CPAs and accountants will always have a place in the business world, but business owners and entrepreneurs shouldn’t underestimate their abilities to manage finances. “the business owner can always get things started,” Baird says. “be confident in your ability to prepare yourself for taxes, prepare the accounting reports, and see the health and near-real-time performance for your business just through work that you can do on your own.”

Final Thoughts Once those systems are in place and running smoothly, having your finances organized will allow the foresight to know when the right time is to make those big moves. “When you get things organized, it can help you with the perspective of knowing when you can turn up the velocity of your business.” According to Baird, digital solutions can help new business owners get organized, stay organized, and see the big picture regarding their company’s performance.

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Top 5 Business Expenses Every Small Business Owner Should Track

By Garrett Baird | April 6, 2022 It’s a tale as old as time: startups and small businesses are so involved in keeping the doors open and getting the job done that tracking expenses and bookkeeping aren’t prioritized. It’s logical in your business to focus on the product or service you’re providing customers. It’s what you’re good at and what you get paid to do.

Why Track Expenses Things get complicated when the money flows. Even if you’re one of the 99.9% of businesses classified as small businesses, the folks at the IRS insist you send them a share of your profit. You’ve worked hard for that money, so you want to keep as much as you legally can. Knowing what you’ve spent your money on can provide you with reasons to send less of it to the Treasury Department.

And, running a business is expensive. The cost to start a small business can range from $10,000 to $1 million.

Keeping your bank balance and expenses in your head promises unpleasant surprises.

A complete picture with accurate information lets you make the best decisions about whether to expand or contract your business. Can you add a new employee? Should you close a location? Is now the right time to buy that piece of equipment that will make your work more efficient? When you know your revenue and your expenses, you can build a budget, which will help you run your business more efficiently.

Scale Your Bookkeeping and Know Your Expenses Given the frenetic nature of running your business, it may be wise to know some crucial metrics. Income is good, but odds are you don’t have a wide range of income streams to track, and right now, it’s only binary: You got paid, or you didn’t get paid.

On the other hand, the money you spend to support your business can seem like a never-ending mishmash of expenditures. When you call on clients or visit a job site, you’ve got to account for the cost of getting there. That could mean a log to track your mileage, receipts (paper and digital) from rental vehicles or Uber, or hotel receipts.

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Finding your next customer means marketing expenses to track, such as a billboard, a web ad, mass-mailing a postcard, or buying an ad on the radio or a podcast. If you’re making a product, you need to track the cost of the items you use to make it, whether it’s fabric and buttons for clothing or wood, screws, and glue if you make birdhouses. If you have employees, your payroll is a tricky set of expenses. You’ll also likely have insurance expenses for your property and for liability.

The Big Five Expenses Don’t get lost in the weeds. You’ll worry yourself to death if you concentrate on the number of paper clips or pens you’ve got. Instead, focus on the five main expenses most businesses have at the outset and you’ll have a good idea where the bulk of your money is going. The bonus to this list is that all these items can be deducted against your revenue in calculating your income when it comes to tax season.

Your business likely has these five key expenses. Know what they are and record them.

1. Communications. Whether you’re a landscaper, a plumber, an Internet developer, a dressmaker, or an antique dealer, you’ve got to talk to people. The most reliable tools for that — and the ones that will probably account for a big, regular expense — are your monthly phone and Internet bills. Whether you talk, text, or email, you need them all to be available for a prospect or a client to reach you.

2. Location Expense. If you make something, you’ll have to put it in a customer’s hands.

Lump all these related expenses here: mailing correspondence or contracts, shipping a finished product, or physically delivering a product or performing a service.

3. You can’t run your business by the seat of your pants. If you’re generating a service such as web design or have a legal practice, you’re going to need an office and related equipment: computers, desks, chairs, printers, copy machines. If you’re a landscaper, you’ll need weed trimmers, lawn mowers, and backhoes. If you’re making something, you need equipment that cuts, stamps, molds, or assembles your gizmo, and probably shelves and lift equipment for the place where you store finished product.

4. Payroll and Related Costs. Pay special attention to this category because not only can it be a large portion of your expenditures, it can also be complicated. It also has the greatest potential to land you in hot water. If your business uses independent contractors, that’s an expense that requires tracking and reporting. If you’ve hired an employee, you’ll need to withhold, pay, and account for federal income tax, social security, and Broadpath

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Medicare taxes (as well as state and local taxes).

5. Business Use of Non-Business Property. If you are yourself an independent contractor — perhaps you’re an interior decorator, a home security installer, or a freelance graphic designer — then you may use your personal vehicle to drive to appointments, or you may have an area of your home set aside exclusively for your work or to meet with clients. Those expenses can be significant — and, when properly recorded, can be deducted from your tax obligation.

Beyond what’s enumerated above, consider that every business is unique. There may be something in your business that will be a noteworthy cause of expenditures that’s not included above. Don’t ignore that because it wasn’t listed in this article. If you’re a model and it’s important to buy makeup and fashionable clothing, pay attention to how much you’re spending and record it. If you deal in precious metals or art, the cost of security may be a big expense. Every business is unique.

How To Track Your Expenses Open a bank account solely for your business to prevent commingling personal and business expenses (though some bookkeeping solutions enable you to segment expenses in a single account). Also keep a specific credit card for the business. Otherwise, it may be difficult months later for you to remember whether a specific coffee shop receipt was for personal purposes or a client meeting. Keep an eye on these accounts so you can understand your business’s cash flow and more easily spot expenses you can reduce or eliminate.

If you’re one of the 72% of self-employed people who do their own accounting, you can, of course, track your expenses yourself with any method that makes sense and is accurate.

That might be a notebook or a spreadsheet. But most small businesses that plan to grow use bookkeeping software, outsource certain functions such as tax prep, and eventually put someone on staff. In an increasingly digital world, consider doing the same.

Expenses can be one of the reasons that 20% of small businesses fail every year. Make it your job to ensure you track them.

Garrett Baird is President and CEO of The Neat Company (Neat). He joined the company in 2020 to lead its entrance into the digital accounting space, helping small business owners spend more time growing their businesses while transforming mundane bookkeeping into actionable insights. @neatcompany. The newest such financial manageBroadpath

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ment software, like NeatBooks, works at your desk and on your phone, can link with your bank account(s) — and can even provide business intelligence like which your top expense categories are. All of these are preferable to tossing your paper receipts in a box or digital receipts in your email or random Dropbox folder. Instead, digitize them into a centralized system where they will be automatically matched to your bank account details – for a complete picture of your business.

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How to Assess Your Company’s Financial Health & Simplify Expense Tracking Making sure your books measure up By: Garrett Baird | April 25, 2022

Building the average 1,200-square-foot house requires tens of thousands of nails, thousands of board-feet of lumber and well more than a thousand feet of wiring. Every component needs to be specified, purchased, delivered, warehoused and constructed with the aid of workers, tools and heavy equipment. Incidental charges and large invoices must be managed as inventory is built up and drawn down and employees must be paid. The complexity of things to track multiplies with the complexity of your project.

Given all the moving parts, change orders and unexpected requirements, it’s no surprise that contractors often struggle when it comes to tracking finances.

If you’re able to keep a building frame level or meet long runs of support beams, but don’t know where all the receipts are or how much has been spent on a job to date, you’re not alone.

Check Your Company’s Financial Health Above all, you are in business to make money. You may have a knack for knowing generally how well your business is doing, but, just as you would never order materials without meaBroadpath

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suring twice or checking blueprints, you cannot operate successfully without knowing where you stand financially.

Many construction businesses fail. Reasons for failure include cash flow and pricing issues, overstaffing, lack of organization, faulty processes and not enough decision-making data.

The current environment’s soaring raw material costs and labor shortages are a huge challenge to the industry. Having timely and accurate financial data at hand will help you gauge whether these issues exist and are festering.

Contractors have expertise in running a jobsite, but can find it difficult to evaluate the profitability of their jobs or pull together supporting data for a bank loan. Whether deciding to buy, rent or build an office or a warehouse, acquire more equipment, or hire additional tradespeople and laborers, having a system in place that puts business data at your fingertips is critical to making solid business decisions quickly.

Tackle Your Taxes Few things in life are more certain than taxes. A wide range of your expenses may be deducted against your business income to reduce taxes — so long as you have the receipts to verify them.

The obvious ones are the construction materials used, but don’t lose track of the things that keep your business running like office supplies, safety equipment and marketing.

The sales tax paid on a quick order at your local construction supply retailer or for a truckload of items for an entire building can both be written off, but only if they are tracked.

Some advanced financial management software available today automatically pulls the “sales tax” line items from receipts or comprehensive invoices and tabulates them, ensuring you get those easily overlooked deductions.

Bookkeeping accuracy is essential to operate your business effectively. Keeping accurate records will help you avoid over-reporting your income and clarifying tax expectations. It will also ensure that you make accurate estimated tax payments during the year.

That’s important because if you’ve underpaid during the year, there will be additional penalties due.

The IRS requires businesses to keep accurate records for use in the event of an audit.

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construction industry audits alone.

Prioritize Tracking Accurate bookkeeping will account for all items that are part of your profit and loss, especially those the IRS allows you to deduct. A partial list of items that are commonly used and need to be accounted for includes: • Safety gear and uniforms — Items for safety (hard hats, gloves, boots, goggles); whether you reimburse employees for these items or provide specific apparel to those on the job.

• Construction supplies and small tools — Hammers, tape measures, pencils; anything you need to get the job done.

• Large tools, heavy machinery and other capital assets — Larger tools like a scissor lift, or heavy machinery, such as a crane, are depreciated. Buildings can be depreciated, too.

• Advertising — Wherever you spend money seeking a customer, whether digital (such as Facebook or Google), print (such as an ad in a local newspaper or flyer), postcards to prospects or referral services such as Angi and HomeAdvisor.

• Legal fees — Deduct the cost of attorneys you’ve enlisted to help with forming your business (LLC, corporation or partnership) or reviewing your contracts.

• Electronics — Your business-related computer, mobile phone, tablet, keyboard, printer, monitor, mouse and photocopier are tax-deductible expenses.

• Communications — Your monthly phone and internet service and the devices for using them.

• Labor — The cost to employ people who perform construction-related services for you is deductible. Independent contractors you hire as subcontractors are responsible for their own taxes; for employees, you must withhold their payroll, social security and Medicare taxes and pay those to the IRS. Both require specific IRS forms to be filed with copies to the worker.

• Trade school tuition or professional instruction — Coursework or classes that maintain your professional standing or conferences that provide professional value. These are sometimes required to keep your professional licenses.

• Subscriptions and memberships — Magazines, such as Construction Business Owner, and other trade associations related to your business, such as the Associated Builders and Contractors (ABC).

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Get It Started Your business should have its own bank account, not one commingled with your personal expenses (though some bookkeeping solutions enable you to segment expenses in a single account).

Monitor your bank account to understand cash flow and pinpoint expenses that can be trimmed or eliminated. It’s preferable to use one credit card solely for business charges.

To best manage your documents, seek out an all-inclusive financial management tool. You can scan files, capture images on your mobile device or upload documents directly from your computer.

This process can be automated to eliminate or significantly reduce manual data entry, and it’s encrypted and secure.

Get It Done At this point, you could be wondering who should handle your bookkeeping and accounting. Having a bookkeeper on staff (someone whose sole job is tracking and recording your finances) may be more than you need. Your time is valuable, but a good tool can make keeping track of your business finances easier than you think.

You can manually record your business finances in individual notebooks or a spreadsheet, but financial management software is designed to tackle bookkeeping tasks faster while giving you more business insights. Another advantage of using a financial management platform is that it delivers precisely the kind of information your tax accountant will need to prepare and file your business taxes.

Here are six key elements small business owners should look for when deciding what financial management software to use: Small business solutions that require no accounting expertise do, in fact, exist. Empowering you to manage your books while receiving real-time visibility of finances allows for better decision-making.

Viewing your bottom line in a matter of seconds is essential. View cash balance, top expense categories and total sales with a few taps. Look for a solution that automates essential accounting reports like profit-and-loss statements, cash-flow statements, balance sheets and expense reports.

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Invoicing capability that permits you to quickly create and send customized invoices from desktop or mobile phone, while enabling customers to make bank transfers or credit card payments with one tap.

A cloud-based solution that syncs with your bank account and credit cards reduces manual entry, decreases errors and helps you keep up with bookkeeping tasks on your mobile device.

Businesses are still operating with too much paper. Look for software that turns your receipts, invoices and bills into digital, searchable documents and matches them with your banking data.

A streamlined experience will keep things so simple that you won’t need a bookkeeper to keep your books. Look for powerful mobile apps that allow you to keep business finances moving regardless of location. Other capabilities to look for include ease of use, in-app guidance and expert support.

Make It a Habit Everything covered here will improve your books and your bookkeeping process. However, there is one more thing you should commit to: Make bookkeeping a habit.

In contracting, few things go the same way every day or every month. Using a mobile-enabled solution and setting a regular time to review your finances may be the biggest improvements you can make. The amount of time needed will differ depending on whether you hire someone, do it yourself or work with a financial management platform.

Whatever prompts you — third Wednesday of the month, after the sales meeting, having an employee remind you — be sure to do it.

Remember: While you’re building things, you’re also building a business. Be sure to give yours a good foundation.

Garrett Baird is president and CEO of The Neat Company (Neat). He joined the company in 2020 to lead its entrance into the digital accounting space, helping small business owners spend more time growing their businesses while transforming mundane bookkeeping into actionable insights. Baird holds a bachelor’s degree from Cornell University. Visit neat.com.

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How Accounting Is (Finally) Catching Up to What Today’s Entrepreneurs Need Author - Editorial Team While the way we do business has radically changed, small business accounting hasn’t changed much. For today’s entrepreneurs, tackling tasks like bookkeeping and invoicing with traditional small business accounting software is at odds with how they naturally manage money.

For some time now, mobile apps have replaced what used to be necessities of everyday living: payments by mail, in-person bank deposits, and paper credit card statements. Sure, those options are still available for those accustomed to them. But as our culture continues to prioritize ease and convenience, it’s more likely to get someone to pay through Venmo than with a personal check.

The DIY Revolution Earlier generations of small business entrepreneurs used to outsource bookkeeping as a standard practice. But today’s entrepreneurs believe that managing the books is one of their core responsibilities.

Taking control of these responsibilities can provide a deeper understanding of key financial metrics and business health. Unfortunately, traditional small business accounting software often requires trained accountants and bookkeepers—discouraging owners who want to handle finances themselves.

As a result, you will spend an uneven amount of time on administrative financial tasks rather than concentrating on what entrepreneurs do best: grow their businesses.

How Accounting Started The Italian merchant Benedetto Cotrugli standardized what we now know as traditional accounting in 1458. He used paper journals and ledgers to track assets, receivables, inventories, liabilities, income, and expenses.

At the time, it was a big deal. Almost 600 years later, not so much.

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world of digital banking, the traditional nine steps simply don’t apply anymore.

The struggle to effectively balance books in a digital world has been a long time coming, but disruptors in the fintech industry are finally giving small business owners better software options that provide real-time financial information and cut the time spent on bookkeeping.

Choosing a Solution With the accounting software market expanding, how can entrepreneurs see-through sleek marketing campaigns to find the tool that will actually work for them?

Regardless of the app, choosing one that’s intuitive and caters to a business’s unique needs will provide more value to its users than just choosing the one with the most bells and whistles and then dreading each login.

Here Is a Checklist to Consider When Evaluating a Tool: A Quick Learning Curve Look for solutions that don’t require pre-existing accounting expertise. The system should be easy to set up and use. A good solution will offer plain language explanations and provide valuable tips along the way.

Built-in Processes to Identify Discrepancies Catching mistakes (or fraud) is done by comparing records with the records of vendors, banks, or credit card companies. In accounting speak, this is called “reconciliation.” Look for a cloud-based solution that syncs with bank and credit card accounts to eliminate manual work and reduce errors.

At-a-glance Financial Analysis No matter the app selected, it should be easy to view cash balances, total sales, and expense totals by category with minimal taps.

An Easy-to-use Mobile App A mobile-friendly bookkeeping process should include the ability to view reports, access documents, create/send invoices, and view transactions anywhere from a phone. This is because, in today’s world, businesses owners are often on the go.

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Secure Cloud Storage There are many options for going paperless. But not all are safe for financial documents, which should be encrypted to keep sensitive information secure. A well-rounded accounting app will provide encrypted, searchable cloud storage for receipts, bank statements, invoices, and bills that makes the in-app process of tax prep and checking for errors easy.

A Straightforward Customer Invoicing Experience The invoicing and payment process for both business owners and customers should strengthen the relationship by being accessible and clear. Offering credit/debit card and bank transfer payment options improve the experience for all parties. What’s more, doing so can help speed up cash flow for the business providing the product or service.

Efficient and effective workflows: The best solutions keep it simple when it comes to bookkeeping technology. Powerful apps that keep business finances moving should fit naturally into an owner’s workflow—not the other way around.

Modernized Bookkeeping The expectations that entrepreneurs have for a modernized bookkeeping experience aren’t unreasonable. The explosion of remote work, the gig economy, and the overall demand for increased flexibility across workspaces call for more mobility and easier access to financial data.

Contributor Garrett Baird is President & CEO of The Neat Company. His company offers cloud-based solutions that hundreds of thousands rely upon to bring financial order to their small businesses. Neat is helping businesses track, manage, and centralize their financial data to be prepared for tax time. It also helps them stay informed about the health of their business.

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How Young Entrepreneurs Can Use Accounting To Generate Small Business Bliss By: Garrett Baird, President and CEO of The Neat Company | March 11, 2022 When you find a way to earn a living from what you love or what you’re good at, you are happy, fulfilled, and living your best life. That is, right up until it’s time to do the accounting.

No matter what kind of professional or small business owner you are, you’ve eventually got to keep track of the money — what you’re getting paid and what you’re paying out.

And while accounting shows you where your money goes, it’s not why you went into business.

Here are things you can do as a young entrepreneur to make it less about accounting and more about what you do:

Make Your Accounting Accountable to You. First and foremost, whether you’ve got a side hustle or a new startup, you need to be sure you know whether you’re profitable. Profit is what’s left after your products or services are delivered and your vendors are paid. There are accounting terms to know — like what an asset is and what a liability is — but concentrate on the things most relevant to you. By the time you need to know about advanced concepts like weighted-average accumulated expenditures on self-constructed assets, you’ll be hiring people with advanced degrees to account for your money. Until then, look for an accounting platform that speaks your language.

Make Your Accounting Easy.

Keeping books will eat your time up like few things can. Yes, it’s a snap to just toss all your receipts and bank statements in a box to deal with later, but then “later” arrives and you’ve got no idea why half of that paper wound up in that box. A cloud-based accounting platform gives you the power of organization. It keeps everything in one place, making it easy to scan your documents, categorize them, and review when at your desk or while you are on the go.

Make Your Accounting Tell a Story.

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As an entrepreneur, you’ll too often think about accounting solely in terms of income taxes. But to fund the things you want to do in life, you’re going to want to make a plan that moves you from “once upon a time” to “happily ever after.” Accounting reports based on accurate, up-to-date information can do that. For example, a profit-and-loss report can lay out trends in revenue and expenses that indicate how you can improve overall profitability.

Your balance sheet gives you a look at how your business is changing over time, especially whether you’re susceptible to bankruptcy (bad) or you’ve got cash that can be reinvested to grow the business or to buy something for yourself (good). These reports also enable you to determine how your plot unfolds along the way. Can you hire additional staff, and will it pay off? Do you have expenses that can be reduced?

Make Your Accounting Your Key to Confident Decision-Making.

Having current, and accurate information makes your decisions easier and creates less stress. Find an accounting platform that turns your receipts, bank statements, invoices, and bills into digital, searchable documents and automatically matches them with your banking data. It will catch errors like double billing, and make tax preparation easier. You’ll find that when you have your business finances all buttoned up, you can think strategically. You can make good decisions about prospecting for new work and expanding your services. Don’t be overwhelmed and intimidated by accounting, the lingo or the numbers.

Then you’ll be empowered to do what’s needed, capitalize on new opportunities, and even get a good night’s sleep. Confidence will make you happy.

Make Your Accounting Your Cool Friend.

In real life, a cool friend is always there for you, does what you want to do, and brings pizza and beer when you need it. Your cool friend will do a favor just because you asked. Your cool friend will even tell you when you’re making a mistake. Think of a cloud-based accounting platform the same way. Call on it anytime. With all of the data easily entered and reconciled conveniently, you’ll be ready whenever you need to apply for a loan, or (perish forbid) you’re audited. Cloud-based accounting provides the most relevant reports when you need them with the tap of a key. And, like a cool friend, you can make plans with it.

When you approach accounting with the above in mind, good things, like feeling in control of finances and making good decisions, happen.

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Keeping Books for a Small Business …

Without Spreadsheets By: Garrett Baird | March 10, 2022 From side hustle to freelance to startup, keeping track of money just can’t be ignored. This is called bookkeeping, and it helps you know how much money you’re earning, where your business is spending and how much you are making.

The practice has evolved somewhat since 1458, when Benedetto Cotrugli standardized the practice of bookkeeping and accounting. He used actual books called journals or ledgers, a convention that extended to not that long ago. You are lucky. Today there is technology that makes it much easier and way faster.

Many small businesses — 69% according to Small Business Trends — choose spreadsheets.

Perhaps you do, too. Microsoft Excel and Google Sheets are ubiquitous, and pretty much everyone understands the basics.

But spreadsheets can get complicated quickly. First, as your business grows and generates more revenue or spends more (computers, paper, rent, utilities, furniture, raw materials and labor), the books can get harder to keep in order. That simple spreadsheet gets clogged with multiple tabs, and the risk of errors grows with each new formula entered into a cell. Bootstrapped entrepreneurs find that entering financial information into a spreadsheet is laborious and steals time from money-making work. If you’re the owner and you deliver the work, administrative tasks often get pushed aside.

Worse, the spreadsheet doesn’t do all the work. It’s just a giant digital box that performs only as effectively as the person inputting data. It’s just making it prettier to look at than your handwriting and crumpled receipts. The bigger problem is that a spreadsheet lets you do anything, including diverging from good accounting practices.

This is where it’s time to turn to an advanced bookkeeping system. A good bookkeeping system doesn’t just track the numbers. It organizes your data, files, financials and workspaces (which, depending on what you do, can take you anywhere). Good bookkeeping makes it easier for your business to be evaluated — for a loan, by a potential investor or even for an audit. It also makes it easy to find the information you need to create reports that help you make decisions and plan for staffing, growth and supply chain management.

Good bookkeeping can even improve your productivity.

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Generally accepted accounting principles (GAAP) lay out the basics for tracking every business in a way that’s understandable and comparable, no matter who is looking at them. A spreadsheet built on the fly makes it too easy to sidestep GAAP. Using a spreadsheet may mean the way you do things may be understandable only to you. Basic accounting concepts to know include: • Accounts (any group of similar financial things).

• Accounts payable (money you owe for a good or service) and accounts receivable (money owed to you).

• Assets (things of value you own).

• Liabilities (things you owe).

• Balance sheet (an enumeration of assets and liabilities).

• Double-entry bookkeeping (recording every transaction as a credit and a debit so you can see where the money comes from and where it’s going).

• Cost of goods sold (the value of goods and services required to acquire or manufacture the thing you sell or resell).

• Expenses (costs to operate the business).

• General ledger (the sum of all of your accounts).

• Income statement (explaining why your business operates at a profit or loss).

Luckily, just as spreadsheets were the “Next Big Thing” back in the 1990s, today’s cloudbased accounting has proven to be a salvation for small business owners. If that’s you, and you haven’t memorized bookkeeping vocabulary or earned a CPA, a cloud-based accounting platform enables you to be more engaged with your bookkeeping. And there’s no need to be intimated by accounting terms and concepts – the right software will guide you, step by step, through the process. It will capture your data by scanning documents, such as invoices, automate data entry and match transaction records. A cloud-based platform means less time accounting and more time making, selling or servicing your clients. You can manage your books at your desk, on your phone, or on the go, with little or no accounting experience required.

What should you keep in mind when evaluating small business accounting solutions? A good cloud-based accounting system will: Work with your business bank and credit card accounts. Keeping your business and your Broadpath

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personal money separate is a must for tax purposes and helps avoid confusion. Once a cloudbased system is connected to your bank and credit card accounts, it can match and track all of your incoming and outgoing cash, while correctly assigning each transaction to the appropriate bookkeeping account. You can’t connect your spreadsheet to a bank account.

Automate data input. Your financial data can be automatically pulled into the system from paper documents you scan, digital documents you upload and what is captured from your bank account — the app will then store and organize that information in the cloud.

Enable charted accounts. The cloud-based system will organize all your money and expense data into buckets (charted accounts) that let entrepreneurs understand which kinds of transactions add to their income or contribute to their costs.

Track expenses. It’s not enough to know that you’ve spent a load of money this month on things you needed for the business. A good small business accounting solution will use charted accounts to separate your expenses into key categories like advertising, office supplies, internet and phone, client gifts and, if you have employees, payroll. And remember, this is all automated, not entered manually by you or a hired hand.

Record and monitor receivables. When a client promises to make a big payment for your service or product, that’s an account receivable — and an asset coming your way! But what if clients aren’t paying on time? A pile of unpaid, or aging receivables, can’t help you pay your bills. A bookkeeping platform will track this and alert you to remind clients about unpaid invoices. You may realize that you need to cut a client off by logging invoices to enable reconciliation. A good platform can do the work of matching incoming payments to the invoices you’ve written. Time is valuable in your business and should be spent working on the business and not finding the right spreadsheet tab to record a check.

Work with multiple customer payment methods. A customer-oriented business accepts more than cash or checks, and business conducted online will have even more options. If you’ve done the research and are ready to accept credit card payments, ACH (automated clearing house) funds drawn directly from a checking account, cryptocurrency or trades, it’s important to be sure that you can handle accounting for all of them. A good cloudbased bookkeeping system speaks all the payment languages for you.

Provide all the benefits of double-entry bookkeeping. Unless you have only a handful of transactions every month and don’t have expenses, double-entry bookkeeping allows a deeper look at how your business is performing. That’s because it’s recording every Broadpath

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transaction twice, debiting an account (for example, office supplies when you buy a laptop) and crediting, say, your assets account. A cloud-based bookkeeping system will automatically generate financial statements like your income statement and balance sheet (mentioned above); that would reflect the new laptop and the reduced cash in your bank account and the value of that asset. You’ll need this tracked correctly to prepare and file your taxes. You’ll also find these statements useful for analysis needed for planning, staffing and growth.

Monitor cash flow. When you use a cloud-based bookkeeping system you can see — with just a tap or two of a keyboard or mobile phone — how often cash comes in and how often it goes out. You can then use that information to more efficiently control things that might normally not get looked at with a spreadsheet. If your inventory is costing you money by sitting on a shelf, you can price it better for faster sale. Your payment terms can be adjusted to get cash faster. Knowing these numbers even makes it possible for you to negotiate better rates with suppliers.

The best thing about a cloud-based bookkeeping system is that it’s easy for you to use (forgive the repetition). That makes it less stressful for you to jump right into doing the business without learning a whole new discipline. You don’t do accounting; you do what your customers are paying for. Steve Jobs wasn’t known for how quickly he entered accounts receivable; Elon Musk isn’t worth billions because he knows how to generate a pivot table. Why should you?

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A Tax Checklist All Small Business Clients Need Tax season is tough enough without having to sort through a mess of paperwork a client tosses on your desk. Fortunately, this is one problem that has a solution: Give small business owners a checklist to follow so they’re clear about what you need to do your job. Garrett Baird, CEO of The Neat Company, explains what should be on the list.

By: Garrett Baird | Apr 12th 2022 One of the most painful challenges your accounting practice can face is the small business or solo entrepreneur who shows up at the front desk with a box full of disorganized receipts, a problematic ledger of check deposits, and confusing home-grown spreadsheets of indecipherable numbers.

Any number of reasons create this sort of client. Like the little engine that could, you love these intrepid small business owners. But also, like that little engine, these clients thought they could keep on top of bookkeeping. They thought they could keep track of finances -up until they couldn’t. Their expenses haven’t been properly accounted for, are incomplete, or weren’t recorded at all. Payroll has been mismanaged: people were hired without completing the proper tax forms or properly making employee tax payments during the year.

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these hopeful clients hold in the ability of an accountant to perform in these conditions is inspiring, ascribing abilities that are almost super-heroic.

In a way, the faith that these hopeful clients hold in the ability of an accountant to perform in these conditions is inspiring, ascribing abilities that are almost super-heroic. Even when these types of clients are charged appropriately for the time they require, they still add stress and anguish. Had finances been managed better by the business owner throughout the year, the process could have been straightforward. The recommendations, applications, and checklist below are ideal for leading small business clients to good bookkeeping practices that will help you both.

Their Pain Is Your Pain People turn to you for help because they’ve been too busy doing what they get paid for to pay attention to taxes. When these small business owners walk through your door, you have an opportunity to ease their minds, solve their problems, and win their trust. Because once they’re satisfied with your support at tax time, they’ll seek out and appreciate your guidance throughout the year to keep financial management on track.

Besides helping your clients complete their 1040, 1120, or 1065 forms, you’re ideally advising your prospects and clients what they can do to track their business finances, which should help put them on a path to succeed. And this will help you to work their account more efficiently.

If only you could throw open your shirt to reveal you are a Super-Accountant, with powers and abilities to do all the things you need to do for your clients. Since you can’t, your next best step is to explain to them bookkeeping responsibilities or the accounting work you do for them — instructing how they should maintain their financial records so you can best advise them and address their tax considerations.

Introduce the Checklist Small business owners, consultants, and side hustlers who handle their own bookkeeping will benefit from receiving a checklist of items that would ensure accurate and precise tax filings with a simple, easy process. This prepares them for tasks they need to do on their own, helps them organize their tasks, and, most important, helps them provide you with the right data.

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Hand them this checklist (or email them this link to a PDF they can download) so they have handy reference to the things you need them to bring: suggestion -- Neat should create a page that will link from the previous sentence After a new client is established and existing clients understand what is required, set them to work on capturing the right data and supporting documentation. Put them on course to do this every year. Urge them to make a commitment to attend to their bookkeeping regularly. Explain how much easier tax time will be for them if they spend a little bit of time throughout the year getting their figures and documents in order. Also advise them that a paper journal and physical files means they’ll be paying you for time not related to actually doing their taxes and perhaps not finding time to advise them about their business.

If they want to use a spreadsheet, double down on how they need to make sure that they get all of their columns, worksheets, and formulas correct — and the downside of having a small calculation error mushroom exponentially, perhaps leaving them unprepared for the actual size of their tax liability.

If they want to try a financial management system, there are several, and they’ll provide business insights that can help year-round. Impress upon them the value of a system that automates data capture, shares information from bank and credit card accounts, and is easy to use. Now might be the right time to suggest they share their business and succession plans with you. Then you can reach into your accounting utility belt and provide the long-term, month in and month out accounting guidance that having their accounting buttoned up leaves time for.

The very act of offering your service means that small businesses will come to you for help. Too often, they’ll hand off sloppy, imprecise, or impenetrable recordkeeping. Giving them an outline of what you need, a good pep talk about why it’s good for them as a business owner, and your recommendation for a good all-in-one financial management system that they can handle, is the best route to success for both of you. They’ll find insights that will benefit them all year long, not just at tax time. You’ll find a client who prizes you for your ability to provide relevant takes on their business. And together, you’ll both avoid future tax preparation process pain.

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NeatBooks Review Accounts receivable management with a different take on reconciliation

By Kathy Yakal | January 12, 2022 You may know The Neat Company from its scanners and associated apps that parse data from any financial document you scan, such as receipts and bank statements. You may not know that the company has since launched NeatBooks, a double-entry accounts receivable service. NeatBooks’ solid accounting tool focuses on helping you download transactions from your online bank accounts and categorize them.

you don’t need everything NeatBooks offers. One, called NeatInvoices (free), is a simple invoicing utility that supports a payment gateway (WePay) for accepting payments from customers. The other is NeatFiles ($25 per month or $300 per year), which provides unlimited online storage for your digital financial documents. NeatFiles has the same data capture and parsing functionality as NeatBooks.

NeatBooks gives you four ways to bring those transactions from source documents (like receipts) into an online storage area. As it receives those source documents, NeatBooks pulls key information, such as date, vendor, and amount, and places it in the correct fields of online records. When transactions are matched with their original documents, they’re considered reconciled. You can also create and send invoices, generate customizable reports, and access reconciliation tools on a mobile device.

The $40 monthly price for the full service is on the high side for a first release. QuickBooks Online Essentials, which does much more, has a regular price of $50 per month. Zoho Books Premium, which has some features even QuickBooks Online doesn’t, is just $35 per month. Sunrise and Wave, which offer both accounts receivable, accounts payable, and more, are both free. All these competing products let you attach source documents to transactions, but none offer the document storage and matching capabilities NeatBooks does. Additionally, those that parse data don’t do it as quickly or as well as NeatBooks.

NeatBooks lacks some of the functionality found in competing accounting applications, like accounts payable, time tracking, inventory tracking, and sales form customization. But it’s more adept at facilitating document uploads and parsing data from financial forms. NeatBooks is an excellent first effort from The Neat Company.

Three-in-One Pricing NeatBooks costs $40 per month or $432 per year.

NeatBooks includes the capabilities of two other Neat products, which you could buy separately if

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Setting Up NeatBooks The setup process consists of several steps, some of which you must do before getting to work and others that can be done later. You first supply your contact information, industry, number of employees, and year established.

Then the service asks if you want to connect a financial account to the site by supplying your bank login and password. You can add checking

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and savings accounts, credit cards, and loans (no investments). You can keep adding accounts or exit to the site.

You complete the setup by opening the Settings from the homepage. There, NeatBooks asks you to customize your categories. When you do, you’re actually modifying the default chart of accounts that NeatBooks provides.

The chart of accounts screen is divided into three columns: Parent Categories, Common Categories, and Custom Categories. Parent Categories hold your core accounts, like Income, Expense, and Asset, and below each entry are standard subcategories, including Sales and Billable Expenses, Auto Expenses, and General Business Expenses. Click on any of these entries, and the middle pane displays Common Categories for that entry (like Education and Travel), if any exist.

Most categories can stand alone. You can check a box to add any listed subcategories to your chart of accounts or create your own Custom Categories in the third pane.

This process is a very simple and effective way to build a chart of accounts, but it does require some time and decision-making.

Most accounting applications provide a comprehensive boilerplate list of the typical, detailed categories and subcategories that are contained in the chart of accounts, though they allow modification. NeatBooks asks you to expand the basic categories and subcategories that are automatically included on other sites.

However, NeatBooks does let you enable, disable, rename, edit, and move categories. Some accountants don’t want their clients to be so hands-on with the chart of accounts because it might affect their reports and their tax planning and preparation, but there’s another level of categorization on the site that’s matched to tax

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forms and schedules (more on that later).

Vendor Mapping Another step involves vendor mapping, which helps speed up your reconciling. NeatBooks displays a list of the vendors it’s pulled from transactions you’ve imported and has you select default categories for them. All are selected by default. You can uncheck any you don’t want to include, though leaving them out might cause problems with matching future transactions.

Most competing sites have a similar feature usually referred to as rules, which automatically associate certain transactions to a particular category, but they’re based on more than just the vendor field.

If you try to disable a vendor that has an existing transaction in your register, you’ll get a big red warning message and won’t be allowed to do it. You can also add vendors. But here again, you need to make sure the name you’re adding matches what the bank has on file exactly. If while you’re selecting categories you find that you don’t have one you need, you can click a link that takes you back to the Chart of Accounts page and add or edit it, then return directly to Vendor Mapping.

More Setup You’re also asked for the month and year when your NeatBooks bookkeeping should start.

You’re also asked to indicate which business accounts you’ll be reconciling.

You need to enter starting balances, meaning the amount of money you have in accounts at the beginning of your fiscal period. If you’ve been using another form of bookkeeping, you don’t want to have to enter every transaction in all your accounts. So your starting balance picks

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up where your previous bookkeeping ended.

You’re not required to enter your starting balances before you start working. In fact, the site recommends you consult with a tax professional to get them right. Once you have the numbers, you can create a Journal Entry, something accounting websites try to avoid. But it’s is a simple task. You click a few well-labeled links and enter the number.

Exploring Settings Right after I go through the setup process for an accounting application, I like to visit the Settings. It lets me learn about new features and see what options I have to modify any default settings.

In NeatBooks, you click your company name in the upper right corner to get there. A dropdown menu appears that lets you return to the Chart of Accounts and Vendor Mapping areas.

You can view the site’s User Settings, which include your password and security questions, as well as your unique NeatBooks email address.

The email address is for forwarding digital documents into the system, like receipts for NeatBooks to read (more on that later).

An Account Settings area includes options for your currency (US and Canadian dollars are supported, far fewer than some other sites allow) and a link to your business profile. You can also invite other users by providing names and email addresses. Those individuals will be invited to create a NeatBooks account and will have full access to the site. You can’t manage user access permissions to the level of detail that you can in QuickBooks Online.

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NeatBooks lives up to its name. It has a very tidy, colorful, and attractive user interface.

Navigation uses standard conventions and is easy to understand. This usability is evident from the start when you click the dashboard entry in the vertical navigation pane on the left. The first thing you see is the Net Cash Flow chart, which you can view in a variety of date ranges.

Below that are links to four ways to bring digital documents into NeatBooks to be parsed and entered as records on the site. The app supports receipts, bills, contacts, documents, invoices, statements, checks, and, oddly, recipes. You can import them from your computer system files as Neat-acceptable file types (PDF, JPG, TIF, PNG, or BMP) or email them to your unique address.

You can capture them on your smartphone using the NeatBooks mobile app.

If you have a Neat-Certified TWAIN-compliant third-party scanner(Opens in a new window) (there are many of them) and the free Neat Scan Utility, you can scan documents directly into NeatBooks.

Other links on the dashboard take you to user tips, a feedback portal, and your items, meaning receipts, invoices, and so forth. Some competitors’ dashboards are more fleshed out and include a list of account balances, additional charts, and a to-do list, for example.

While NeatBooks doesn’t have a to-do list per se, it does notify you at the top of the page if you have items to review. To see what’s typically included in a dashboard—charts illustrating top expense categories, cash balance, profit and loss, and total sales—you have to click on the Insights link in the toolbar.

A vertical toolbar on the left side of the screen contains links to the site’s primary tools and

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functions: Invoices, Transaction, Reconciliation, Insights, Reports, and File Cabinet. Farther down are links to NeatBooks support options. I like that there’s a searchable database of FAQs and well-written step-by-step instructions. You also get a form for submitting a support ticket, live chat, a phone number for support, and a scheduling page for one-on-one phone calls with site experts. These options seem more than sufficient for a relatively simple site.

Moving Documents Into NeatBooks Previously I mentioned that there are multiple ways to get documents into NeatBooks. How well do they work?

I scanned and emailed a simple invoice with a half dozen line items on it. NeatBooks processed it in about a minute and dropped it into my File Cabinet, under Needs Review and All Files. When I clicked to review it, a new two-paned screen opened. On the left were all the possible fields for digital documents. The right side displayed a copy of my original invoice. NeatBooks pulled in the date, item type, currency, and total amount and put them in the correct fields. It missed the invoice number and vendor name, so I added them manually and saved the invoice. I also had the option to reprocess it, email it, trash it, or export it as a CSV file.

have expected NeatBooks to score 100 percent in its field-matching, and it didn’t. Still, it’s fast and often quite thorough.

Creating Invoices Before you can start creating and sending invoices, you have to provide NeatBooks with some information. It wants your organization’s contact information and optionally a logo, a starting invoice number, your invoice reminder schedule, and the text for your terms and conditions. You can modify any of this information in the Invoice Settings. Once you’ve entered the preliminary data, NeatBooks walks you through a brief tutorial on creating invoices, which is well-done and worth watching if you’ve never used an online invoicing application.

Despite whether you’re experienced with invoicing, the Create Invoice screen is intuitive.

When I tested a second invoice, NeatBooks pulled in the same fields as before, plus the vendor and category.

The invoicing page is set up similar to competitors’ invoice screens. Several fields appear at the top that either must be filled in or are already completed. You click in the Customer field to open a drop-down menu, which contains only one entry when you first start: Create Customer. Click it, and a panel slides out from the right that contains blank fields for your customer contact information.

Once you’ve completed the form and clicked Save, that record shows up as an entry in your growing list of customers, so you can just select the correct one when you’re creating an invoice.

Customer data here is minimal, not nearly as comprehensive as what you get in Zoho Books.

In the business world, there is no standard invoice or sales receipt or any other type of financial document. Fields are in various places on different forms and they sometimes don’t even use the same terminology. So I wouldn’t

Your invoice number and date should already be filled in, so you can move on to Terms. A drop-down list displays your options. Select one, and NeatBooks automatically supplies the due date. Below these fields is space for

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entering line items. Click +Product/Service, and a drop-down list appears with one entry: Create Product/Service. A panel slides out from the right with just a few fields for you to complete: Name, Description, Price, and Quantity. You can also check a box to include tax if applicable.

NeatBooks does not offer inventory tracking, as Xero and others do, or there would be more fields to fill out.

Once you’ve entered a product or service, a new button appears below it: +Discount/Fee. Click it and add one or both in the pane that slides out from the right. NeatBooks enters them as individual line items. You can’t specify a percentage of the sale as a discount as you can on competing sites, only a dollar amount.

Amounts that are taxable appear with a superscript T next to them. So when you’ve finished entering products and/or services, you click the Tax field at the bottom of the invoice, then Add Tax. Enter the name of the tax and percentage in the right pane and save it, and NeatBooks calculates the tax amount. If you want to add a note to the customer, you can.

Otherwise, you’re done. NeatBooks will have done all the required calculations and displayed the Total Due in the lower right corner. Save it and preview it, and then you can edit it, send it, mark it as sent, export it to PDF and print it, void it, or duplicate it. The final invoices look simple, professional, and attractive.

Once you’ve created one invoice, you’ll have an invoice homepage. The amount outstanding and past due appear at the top. You can toggle between invoices, customers, and products to see lists of the entries you’ve created and edit them when necessary. Here again, NeatBooks doesn’t offer the depth of detail that many competitors offer. For example, you can’t

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customize invoices at all the way you can in Wave. But a lot of very small businesses aren’t so concerned about those capabilities.

Transaction Management If you’ve connected your online accounts to NeatBooks, you can take advantage of its transaction management capabilities. The Transactions page displays your accounts and their balances in a pane on the right. You can add accounts here and refresh your feed. You can also change the date range and set filters and enter transactions manually. Unfortunately, NeatBooks wants you to designate these manual transactions as debits or credits, two words that accounting software tries to avoid. The register contains a good amount of information for each transaction it brings in, including columns for date, vendor, and amount. NeatBooks attempts to categorize each transaction, but it missed the mark on several of mine.

At least it’s easy enough to correct. Click a transaction, and it opens in a new window. I find having a new window a bit inconvenient, as competitors keep you on the register page to work with transactions. In any event, the new window shows the primary fields filled in.

Click on the Category field to open the list and choose a new category. You can open even more fields by clicking a link, but you have to fill them out yourself. One of them is Tax Category (for deductible expenses). The Tax Category is different from the more general Category you assigned to the transaction for internal use. The list of Tax Categories includes names of forms and schedules for both the Canadian and US tax systems. Tax category assignments become very helpful when you’re preparing your taxes.

You can also assign the transaction to projects and make them billable to customers.

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On the right side of this screen are two more links, one for attaching a source document to the transaction and another to search your Neat files for a source document that’s already uploaded. You can save the transaction or save it as reconciled if you’ve selected a matching source document or clicked the box next to No Source Document.

Reconciliation and Reports Account reconciliation typically involves matching the transactions on your bank statement to the ones in your checkbook register, whether on paper or online, and making sure the difference between the two is finally zero. NeatBooks uses that word to describe its process of matching transactions to digital source documents.

When you click the Reconciliation link in the toolbar, the screen that opens displays the four “buckets” in which your transactions from each account can appear. Suggested Matches are just that: transactions and source documents that appear to be related. Refunds & Credits and Deposits are grouped together and can be reconciled. And Other Unreconciled are transactions that need to be verified, matched, and reconciled. NeatBooks makes this process very simple and understandable.

Once you’ve reconciled all the transactions for a given month, the screen displays a message that says “100% Reconciled.” That month can then be closed, and you can move on to reconcile your other accounts.

I have a mixed reaction to the site’s definition of reconciliation. It’s confusing because it describes a different process from what the word typically means in accounting. In QuickBooks Online, for example, reconciliation means matching your

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downloaded transactions to the ones you’ve entered on the site. You don’t have to manually enter transactions for expenses in NeatBook, for example (although you can). All you need is the source document, which is always right. Human beings make mistakes sometimes when they’re entering data.

Encouraging people to make sure they have documents backing up transactions—and providing a way to store and organize them—is a good thing. Assigning them to tax categories is also a very good thing.

NeatBooks offers templates for eight reports, which is just about right considering its capabilities. It supports standard financial reports (Profit & Loss Statement, Cash Flow Statement, and Balance Sheet). In addition, you can run an Expense Report, Spending Summary, Sales Tax, Spending Detail, and Tax Category.

NeatBooks has significantly fewer reports than QuickBooks Online, for example, but NeatBooks doesn’t have nearly the functionality to support that QuickBooks does. The reports you do get from NeatBooks are very customizable and visually appealing, however.

Mobile Access NeatBooks has both an iOS app and an Android app, but they don’t yet do as much as the website does. Four icons along the bottom take you to the app’s most commonly-accessed functions: Search, Insights (not available yet), Capture (photos), and Reconcile.

There’s also a menu of additional options. From here, you can filter and view transactions, view unpaid invoices, access your File Cabinet, and open the settings and support functions. The app is clean and attractive and performed well for me. Considering that the site itself is so new,

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NeatBooks’ first mobile apps do more than many early efforts by accounting website makers.

A Neat Concept I like the innovative approach that NeatBooks has taken to account reconciliation. It can make reporting and tax preparation more thorough, accurate, and organized. If it’s done conscientiously, with attention paid to every financial detail, it can be as reliable as the more standard method of reconciliation. On the other hand, invoices and transaction management are simpler than they are on competing sites, and there’s no accounts payable. And users would have to build extra time into their accounting work to upload all those source documents. Still, it has a place for many very small businesses.

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That said, our Editors’ Choice award for small business accounting apps goes to QuickBooks Online for small businesses and FreshBooks for very small businesses and solo entrepreneurs.

QuickBooks provides the tools small businesses need to manage their finances capably. The QuickBooks family of accounting websites is scalable, so you can start small and move up as you grow. It’s a perennial winner for accounting, with good reason. FreshBooks is better for the smallest businesses that don’t need everything QuickBooks offers.

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