A discussion about the process, steps and options of starting a new business

Wnever someone says "It's the principle of the thing", we know that it's really about money, right?  Well today is no different.

I've blogged before about the accounting software available for your business, now I want to stress how important it is to learn a little bit about the accounting process itself and not to rely solely upon the software.

Two things prompted me to bring this up.  One is that as my business grows, I am finding that I understand less and less of what the software is actually doing when I record a transaction, and this is leading to a lot of errors.

Second, I recently had a hard drive crash (yes, I know, I should have had a backup) and lost all my data.  Fortunately, I've kept my source documents well organized, so I will be able to reconstruct everything.

In the process, though, I decided that this time, I want to understand what I'm doing.  All those fancy features of the software program don't mean a thing if I can't tell a debit from a credit, or what accounts are affected when I make a sale.  So I set out to learn some basic accounting principles.

Using what I've learned, I am setting up the books this time myself, in a spreadsheet program.  I actually find it easier because I'm not bogged down with a bunch of operating accounts that I really don't need at this stage in my business.

I also learned that by default I was using  one of the most complicated inventory cost accounting systems from my available choices!  While a little knowledge can be a dangerous thing, in this case I'm very glad that I took the time to understand more about what I'm doing.

Even if you have an accountant doing all of your books, it still makes sense to learn at least the basic accounting principles.  Otherwise, how will you know if they are doing the books correctly, or worse, cheating you?

With that in mind, here are a few of the tutorials that I've found:

• Beancounter - a very simple, high level tutorial.  Good for understanding the basics.  Uses humor to make a dry subject more interesting.  (and gets credit for the picture I used, above)
• Business Recordkeeping - this is as dry as it gets, and appears to have been written in 1998, but some things never change.  Goes into good detail about how the journals relate to the ledgers.
• Accounting Coach - in-depth tutorial, with drills and exams to test your progress.
• Ledger paper - if you want to keep the books by hand, here's some paper to print out that'll get you started.