We once used a very sophisticated accounting system that could handle everything - time keeping, invoicing, print checks for expenses, manage accounts receivable and accounts payable, financial statements, project reports and on and on. Eventually the company wanted to phase the program out in favor of an internet-based alternative. We chose not to pay $12,000+ for the privilege of remaining a customer. Before we settled on our current system, b2bee we considered going to the opposite extreme.
Invoices were created from spreadsheet templates depending on the type of billing needed. Each project was set up with a customized template with names, addresses, and fee data. Each month the previous invoice was copied to a new tab in the workbook. The workbook also had a summary worksheet where we could keep track of dates, amounts billed, amounts paid, when paid. The summary could be quickly referenced to get total amount due and amount paid job-to-date for an accounts receivable report or a profitability calculation.
Time keeping was also done by spreadsheet. A folder held each person's own time card spreadsheet. Checking the 'date modified' quickly tells you who is not up-to-date. Honestly the time card was the weak link in the system. Critical information was collected here, but it took too long to update the time card each month and too long to collect information from all the cards. The tool needs to be a shared database. The problem is that we couldn't find a ready-made solution that didn't cost as much as an accounting solution. Since we decided to create our own, we chose what we know - spreadsheets. I think a better solution would be a shared time sheet with the rows holding the person's name, the project ID, total time expense, total hours, and hours per day. The project ID could have a pull down selection so that it is easy to sort and get subtotals.
Paying bills and keeping accounts payable in front of you is pretty simple. If your checking account has an online portal with a bill paying option, you are most of the way there. Set up payees, then simply log in every bill when it comes in and set a date to pay it. Export the history quarterly for a permanent record of expenses and to add annotations where you need to attach project info category descriptions for tax preparation. You will need to do something similar if you use a credit card to pay some expenses.
If, or when, you have employees; get a payroll service like ADP or Paycor. You can't begin to deal with all the tax withholdings, reporting, tax filings, W-2 preparation, etc. for the cost of the service. If you have a clerical person who does accounting, then with the right software you might find that it is better to do payroll in house. Normally the cost of staff time will exceed the cost of the service.
Next up: Other Accounting Issues