Tracking Expenses

A small business owner needs to track expenses. Especially those that can be deducted on his/her taxes. The IRS has all kinds of rules about what can and cannot be deducted. You should probably talk to your accountant to make sure you're doing it right. But if you want, you can also read the IRS Form 535. It can be very helpful. For instance, it says that "When you go into business, treat all costs you had to get your business started as capital expenses." I spent a lot of time reading books and travelling around learning how to start a business. I need to track down these costs and add them to my expenses spreadsheet.

Yes, I'm using a spreadsheet to keep my expense records. There are better methods for keeping track of the accounting aspects of your business than a simple spreadsheet but I'm trying to bootstrap my business so, for the moment, I'm keeping expenses low by delaying this important purchase. 
Many small businesses use QuickBooks for their record keeping. It's quite powerful, and reasonably priced compared to some other options. There's also a QuickBooks Simple Start 2010 option that costs even less. Unfortunately for me I can't use the Simple Start version because I'm using a Mac. There is a version for the Mac called QuickBooks 2010 for Mac, so there's a good chance that that's the version I'll eventually buy. But beware, powerful programs are often quite complicated and you will have to read a book or take classes in order to use Quickbooks to it's full potential.

However, there is another option that I've been thinking about and that's FileMaker Pro 11. I was also thinking about Bento 3but I think FileMaker Pro would make a better option for me. Bento is quite a bit cheaper than FileMaker, but it has limited functionality. Bento is made by FileMaker, so it's a good product, but it does not have the power of FileMaker. And even if Bento would suffice for a new business, it isn't robust enough to grow with your company. In reality, I think Bento hardly offers anything that I can't already do with a spreadsheet. The biggest drawback is that there isn't any way to do reports in Bento. You can fake it, but FileMaker is a real powerhouse. Your business could grow to a multi-million dollar company with thousands of employees and FileMaker would still be robust enough to keep up. The biggest draw back is, like I said about QuickBooks, there is a huge learning curve for database development with FileMaker. You may end up having to pay someone to develop your databases. Bento, on the other hand, is very easy to learn and use.

For now I'll just keep using my spreadsheet. At least I will be able to import the data into whatever database software I end up buying.