Seasoned entrepreneurs, especially those involved in tech start ups, often keep an eye on the company financials. They usually look at their monthly burn rate, or the net drain on the bank account.

Whenever start ups run low on cash, entrepreneurs usually extend the runway by cutting costs. In other words, they have to find alternatives to achieve the same goal at a lower cost, or in a shorter time. Sometimes the  founders may want to cut down bookkeeping/accounting costs by doing it on their own. 

Cloud based applications, especially SAAS, can give start ups access to quality enterprise level programs without the up front cost. As an entrepreneur, you cannot avoid applications for accounting, time tracking, productivity, etc., but if you purchase the enterprise edition most turns out to be overkill or unnecessary for a small business. Most cloud-based apps offer a free plan, so try it out before you spend money on the full-fledged version.

In a post on Evernote’s offical blog, the team claimed they have “discovered and blocked suspicious activity on the Evernote network that appears to have been a coordinated attempt to access secure areas of the Evernote Service.” Now they are resetting all its 50 million users’ passwords as a precaution.

The incident raised immediate fear for all small businesses owners and start-ups: What kind of data should I put on the cloud? Will cloud services put my data danger? 

It might be true, that these types of attacks will occur more frequently. Frauds and identity theft are everywhere, will you refrain from online banking and all financial and business activities over the internet?  Don’t panic, all cloud service providers are also learning their lessons from Evernote, Yahoo, etc., increasing web security measures. Furthermore, in the connected world, every single device may become a victim - even a credit card in your wallet could be read by RFID Identity Theft.

We are taking extra precautions to protect our users’ data. From our users’ side, it is high encouraged that you use a long and complex password, as well as change your password periodically. Never use the same password for more than one application.

Storing data on the cloud is still safer than on your home/office computer (see our previous post). Considering the likelihood of a car accident and a plane crash - car accidents seem to have to a much higher occurrence, but even very unlikely - plane crash is definitely a big disaster!

I recently read some concerns about “how safe it is” to store financial data and supporting documents on the cloud. I would comment that it is now much safer than storing files on your local computer.

How often do you back up your desktop/laptop/tablet? What if your device gets stolen or breaks? Is your device the only place that you can access your accounting records from? Food for thought, when keeping your accounting spreadsheet on your local machine.

For people who claimed “I would NEVER store my files on some cloud server… they’re much safer on my hard drive,” I always ask them the same question:  Do you have gated perimeter access, 24x7 on-site security guards, and security cameras? Do you have a fire detection and suppression system, backup power generators, and a disaster recovery plan in the event of hurricane, flood or earthquake? You can bet your cloud storage provider has all that and more in place to safeguard your data.

Cloud storage typically uses highest level security encryption, which is actually safer than how these potential customers are likely handling their data in the office. Online, only those authorized to see and use the information are allowed access. Security in a typical paper-based office is not so tight.

Cloud storage has been reported as one of the greatest innovations of the computer age and great excitement ensued, but not everyone is ready on board with the trend of cloud storage to keep data safe, accessible, and protected. All it takes is a bit of time, common caution, and some extra research on data encryption.

I was in Paris two weeks ago and saw Champs Elysees all lit up for Christmas. People have been thinking about gifts, vacation, even their Christmas trees at home. If your business year ends on December 31st, it is also time to organize and carry forward your bookkeeping into a new fiscal year. 

Sales Invoices

Time to catch up with your invoices. A list of customers with outstanding balances should be generated for year-end. Your Accounts Receivable balance must correctly reflect the outstanding balances owed to you. Applicable sales taxes must also be reported and paid to your proper government authority at the appropriate reporting period and deadline.

Business Expenses

Make sure your business expenses have been properly categorized. Also check if there are any expense transactions related to your business that were paid from your personal bank account. If you don’t record your business expenses properly, your financial reports will show a higher profit and you will end up paying more taxes. A list of vendors with the outstanding balances should also be generated for year-end. You may be able to claim back the taxes paid on the accounts payable in the fiscal year, depending on your government authority.

Budget Planning

Take your 2012 Profit and Loss statement and enter this information into your 2013 budget. Then take a closer look at the sales and expenses for each month and make any changes you see fit, you may also play with the numbers by percentage change (+/-). Plan for major expenses in the upcoming year.  Acknowledge the seasonal ups and downs (if applicable), that’s something many entrepreneurs are reluctant to do.

Some software may help?

Of course, you could do all the above by hand. You could even do them in Google spreadsheet. But that could get complex in reality. So picking a suitable accounting software is a critical business decision. Avoid accounting applications with too many features,  you’ll find yourself overwhelmed. Sometimes, less is more. 

The more organized you are, the easier it will be for you and/or accountant. This will save you time and money - more time for holiday shopping, and more gifts under your Christmas tree!

Later on, we’ll conspire
as we dream by the fire,
to face unafraid,
the plans that we’ve made,
Bookkeeping in a winter wonderland!