In my first job, I was required to provide the boss an income statement and balance sheet for the business at the end of every month. We wrote checks by hand, with carbon copies of all checks and deposits. At the end of the month I would enter the month’s check in the general ledger in the appropriate expense category then total the categories on an adding machine. I always ran a tape, and had to keep running it until I had two with the same totals. I stapled the tapes to the general ledger for proof that the totals were right. I did the same for all deposits, recording the customer’s name, check number, and the check amounts in one of two income categories.
At least, this is how I was trained. Very quickly I grew tired of all that hand entry and began to use a spreadsheet — PlanPerfect, I think it was. We were using it in the office for other functions, so it made sense to me to enter the accounting data into it. I enjoyed sorting the data and creating the reports the business owner wanted to see. At the time I was more interested in the challenge of constructing the reports than in what they actually conveyed.
I ran payroll and filed payroll filings, with taxes and other with holdings all calculated on the adding machine. I typed invoices and account statements. We had a physical file for every client and every job and when we needed information, we went through the archives.
Now, with QuickBooks (and other bookkeeping programs) and payroll solutions and online banking, running the books of a small business has never been more automated. I don’t know if we could say it’s easier, though, because as we acquire more tools, we seem to add complexity. For a small business to do well in a tough economic climate, they need to use all the tools as their disposal. If you have a small business bookkeeping program and use it only as a check register, or as a repository of unsorted data to provide to your CPA at the end of the year, you are missing out on valuable information that could help you grow your business.
I am grateful for learning bookkeeping the old fashioned way. It provided me with a good understanding of double entry system and laid the groundwork for my business. I am just as grateful to have had that first boss who allowed me to experiment with new tools and who taught me the value of financial reports.