Does your office look like this?

Are you prepared to do the accounting and bookkeeping for your new businesses?

The 4-Hour Workweek opens up the possibility of a migrant lifestyle, travelling regularly, engaging in international businesses, and taking mini-retirements abroad. This lifestyle is supported through aggressive entrepreneurship, which means running a business; running a business means doing accounting and bookkeeping.

Here are five strategies to help you get started on the right foot:

1. Mobilize

The most obvious step to get accounting data off your laptop and onto the internet. You’ll probably only need to do accounting once or twice a month so don’t worry about spotty internet connections. Look out for online accounting software that suits your business; especially look for a system with bank reconciliation, since you can use this to check for errors and omissions that may be more likely given the distributed nature of your business. It’s also helpful if there is an API which may allow you to hire a programmer in the future to automate some tasks.

2. Systemize

Design and document your accounting system. You will want to be able to delegate all your business related tasks on a moment’s notice, possibly to a foreign virtual assistant who will want very precise procedures and instructions to follow. Store this document on a hosted wiki or Google Sites, if possible, so you can easily update and share it.

3. Digitize

If you’re travelling, the last thing you want to manage is paper documents. Digital documents can fit in the change purse of your wallet, be backed up online, and shared to your virtual assistants and contractors. Consider mailing everything to Shoeboxed and Earth Class Mail to make digitizing and managing your documents easier. Keep original documents online using Zoho or Google Docs.

4. Optimize

First, eliminate all inefficiencies and redundancies in your accounting system. If you are entering data into two databases, consider hiring a custom software developer to write a one-click process to copy the data over instead. Also, avoid entering individual transactions where possible; you only need enough detail to do a bank reconciliation on your primary business bank account. If you are getting a lot of transactions on your bank account, consider using a secondary one and transferring lump sums to clear away the clutter on your bank statement.

Second, get familiar with the reporting in your software, and use the reports to apply the 80/20 rule to focus your efforts on the businesses and products that are the most profitable. Don’t forget to value your time - if you want to make $100k per year on 4 hours per week, every hour is worth $500; don’t consider a business profitable until you’re taking at least that wage in profit. Consider using time tracking software to get a more accurate sense of how much time you are spending.

5. Get Advice

Find an accountant with relevant experience to advise you on tax best practices and help you with all of the above. Most people earning $70k or more should be able to get back the accountant’s fee in tax savings, and if your business gets more complex, an accountant will be able to read the pulse of the business in ways only an accountant can.

About The Author

Dobes Vandermeer is the founder of Habitsoft Inc., the maker of Clarity Accounting, an online accounting application for small businesses and startups. He resides in Vancouver, British Columbia, in Canada with his wife and business partner, May Chu, and their newborn son, Dante. Dobes began programming computers before he started high school. His other interests include philosophy, personal development, entrepreneurship, fantasy/sci-fi novels, and business/productivity books.

Connect with Dobes on LinkedIn.

This entry was posted on Sunday, February 8th, 2009 at 12:00 am and is filed under 4-Hour Academy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.