The Idea Behind Ledgerble: An Introduction

Unsurprisingly, most small business owners don't like accounting. When you get up in the morning, there are dozens of things you could be doing—and keeping your books up to date is rarely an exciting prospect. The arcane and complicated terminology all seem needlessly complex, and let's face it, people will often just put it off.

Ledgerble is not our first business. In fact, we have been small business owners ourselves for almost 9 years now. So we know full well what a pain accounting can be, that's why we created Ledgerble in the first place.

Of course, the advantages of providing software online as a service are many, and we don't need to go into them here. But while others have made online accounting programs, I think many of them miss the point. The hard part about small business accounting was not the access or delivery method—putting something like QuickBooks in your browser isn't going to make it easier. What we really need is a fresh approach to how small companies manage their finances. We need a clean slate. We need to make things simple.

The vast majority of small companies, those 1 to 3 person operations, have very simple accounting needs. Most don't need complicated features. They just need to keep track of the money coming in, and the money coming out. They need to be able to see, at a glance, the financial health of their company. They need to keep on top of who owes them money, and to whom they owe money to. They need the data available for tax time.

The idea of Ledgerble is just that. We need to make things simple, easier. Less complicated. A company with 500 employees will have very complex accounting needs. A company with 5 employees probably won't. And that's where we see Ledgerble fitting in.

That's not to say that Ledgerble won't grow and evolve along with our customers. We have many advanced features currently in development, some of which we will share on the blog over the coming weeks. But the focus of these features is and always will be simplicity. We have the opportunity to reinvent an entire segment of this industry, and to use the power and extensibility the web provides to change how small businesses manage their finances. To make things easier, so you can focus on what you do best.

New In Ledgerble: Quick Add

Do you really need to create a whole invoice for that stapler you just bought? Or the $5 parking to go to that meeting?

We have just added the quick-add feature, available for both income and expenses. Instead of creating a whole invoice, with quick-add all you have to do is:

• Select the date. Today is the default.
• Enter the customer or vendor. If you have not done business with that person or company before, just type in their name. A new contact will be created on-the-fly.
• Category: Travel? Office Supplies?
• The amount of the purchase or sale.
• Sales tax, if any.

And hit save. Ledgerble will create all the entries in the background, and the new item will appear in the list of invoices below, without even having to reload the page. You can add another one in right away if you like. All without having to enter line items, due dates, or worry about invoice numbering.

Of course, some invoices can be complicated, and the full invoice screen is still just a click away. But the quick-add feature can save you tons of time for those quick, one-off sales or purchases.

Importance of Keeping your books

What are some of the best things about owning a business, the freedom, keeping your own hours, the money if the business does well. Now if you ask a lot of people what the worst part of any business is they'll tell you it's the administrative part especially the accounting.

It does not have to be, one way for it to be more fun is to look at it less as a waste of time but as something that adds value to your company, to view it not as something you have to do for government reporting, or your accountant but for you to know where everything is going in your company and how you're doing at any given time. Keeping the books is extremely important be it for yourself, your family your partners or anyone else that might become involved at any time. Whether you bring in a new partner or want to sell out or pass the company on to someone in your family it is important not to give them a nightmare in the making.

There are ways to make it less painful

1. Do not slack, do it daily or weekly depending on the number of transactions, you'll find yourself spending 10 mins per period as opposed to 2 days every three months.

2. If it's too much for you hire someone that will make sure it gets done on time and it can be done fairly cheaply if you get a student

3. Think of the good things that will come out of it while you do it (you might get deductions, you will not get fined, you won't go to jail etc)

4. Use a Business Accounting Software that will help you make sure everything is organized the proper way in the right categories.

Income Statement Made Easy

The income statement or as it is otherwise known the profit and loss statement is basically how much money your company made in a given period of time. It contains some valuable information such as your sales, your expenses, and your net income or profit.

So the income statement usually starts with a first line being the sales. If you have different kind of sales for example two types of activities and would like to define them you could have two lines for sales such as printing, and webdesign. Or if you have received interest as a source of income you would enter it here as well. The next line is if you have any cost of goods sold. So if you are in a manufacturing business, or a jewelry maker, or anything where you buy some material and re-sell it that is when you will have cost of goods sold. Subtracting the Cost of Goods Sold from the sales will give you the gross profit figure.

Next come the expenses that are not directly associated to the sales like the Cost of Goods Sold such as Marketing, utilities, car payments, gas, phone bills, etc

Below that you have the sum of all the expenses incurred in the period you are doing an income statement for.

The difference between the Gross profit and the total of the expenses is the final line of your income statement the Net Income.

That's it your income statement is basically how much profit your company have made at any given period in time.

What is an asset for a small business?

Often times small business owners ask me, do i rally need to depreciate anything ? what is an asset ? I thought they were only used for big corporation i just work out of home do I have any assets? Simply put an asset is anything you or your company owns that is worth money. So it is the cash you have in your bank account to the buildings your company owns should you happen to be so lucky.

What confuses a lot of first time business owners that tackle their own bookkeeping whether they use a software or do it with the pen and paper method is how to categorize what they buy, what is a straight expense and what can be categorized as an asset?

Unfortunately there is no straight answer to this question, for some people an asset is going to be something that cost 400 dollars while for others an asset is going to be a car or a truck. As a rule of thumb an asset is something that will remain in your business for quite a while and has some sort of resale value. So the obvious ones are computers, cars, tools, equipment etc,

The difference between an asset and an expense and how it affects your account is as follows.

If you buy a lot of Ink Cartridges, paper, pens and other miscellaneous from your local staples for a total of 350 dollars you will expense that 350 dollars the day you made your purchase. That amount will be deducted from your income right away and will count towards the current period. In turn you will have to pay less income tax for the current period.

If however you buy a 600 dollars computer and classify it as an asset, nothing gets deducted of your net income. And your computer will go in the books as an asset worth 600 dollars. As time goes by your computer will be worth less and less, that is what depreciation is the value lost by your computer over time. So in this example we'll say that the computer will have a 4 year life and that it depreciates by 150 dollars yearly. So the computer will create an expense of 150 dollars every year. Thus reducing your net income over time.