 Tom here from Lauren systems and we're going to talk about the open source tools I use for accounting now a couple caveats here I'm not an accountant. I'm not your accountant and no good legal defense starts with this person on YouTube said Whatever jurisdictions whatever the laws are wherever your business resides, please comply with them and consult a tax professional I'm not even giving out any tax advice, but I just feel some people may Want to start going but this person said all's I'm really talking about as a tools in a process and how we hand it off To our accounting firm a professional services company that we use to actually file all of these taxes But you know the tools are still relevant So if you only learn more about me and my company head over to Lawrence systems calm If you like to hire sure project or say hires button up at the top if you also support the channel in other ways There are some affiliate links down below to get you deals and discounts for products and services that we talk about in This channel, we're gonna talk about accounting. I know it's boring, right? But there's been this question come up. How do you live without quick books? It is the quintessential most important program so many small businesses to rely on well There's processes by which you can not use quick books And there's a couple of them that I have right here that I'm gonna talk about first one is invoice ninja I have a full in-depth review of how we use invoice ninja the software. It's open source. It's amazing. It's free I really like it. I we have all of our invoices and everything there But invoice ninja is not the end all to our accounting process While it is able to send out invoices and collect payments for our clients and keep track of all the money owed to us There's other revenues that come into this company that we need to track and some of them And if I've talked openly about this is we'd make money off the YouTube channel So that's our AdSense revenue affiliate commission and in other revenues other revenues include almost anything as a business And what I mean by that is like well rebate checks that may come in for products We bought any type of interest that comes in off of money sitting in the bank Whatever those other revenues are there are all kinds of miscellaneous categories That's what those are and also get all landed into our bank account now up here at the payments with invoice ninjas Some people pay us via stripe some people pay us be PayPal those are the two services We're using right here in 2020 and PayPal I said partial transfers because I'm not covering this as much in depth because it's not relevant But it does happen. We do pay our bills out of PayPal and our bank account. So yes We have payroll coming out of a bank account We have miscellaneous things that we need to buy parts and whatnot and those come out of PayPal And of course writing vendors checks and paying contractors, etc Look all that does come out and it's all part of the accounting process. Where does it all land though? This is the second part of it why it requires two systems So we grab all the data on the bank accounts and PayPal and we generally do this monthly But we can you can do this at a faster interval if it depending on number of transactions Or just how often you want to keep this up to date And you can download the qif file or csv pretty much every major bank account company Has a qif file export even PayPal has one or csv For a little while we had to use csv with PayPal because they were actually having problems with There's but it seems to work to find whichever one you choose qaf the formatting just a little bit I think a little bit easier to manage but not really a big deal Both work Then we have this tool here k my money Now what we do is all this revenue that came in and of course all the money to impact out Has to go into k my money with these qif files and it has different categories for all of our bank Accounts and our PayPal account and what i'm doing is grabbing this and letting k my money Auto match. How does it auto match? Well, I'll show that in a little bit in a second But essentially if a category such as buying pizza from pizza hut goes into our food expense Category it matches on that ledger code. So the first time I buy it It doesn't have a match second time. I purchase something. It goes. Hey last time you put this pizza hut category into This food category or if you're refueling a vehicle or whichever paying a contractor It has each of these categories and it realizes those expenses belong in certain general ledger codes that you define inside of k my money From there it'll mostly auto match which means doing my accounting becomes simpler and simpler as it goes on And I only have to manage by acceptance such as when we have new vendors Many of the vendors are reoccurring as I imagine for most business They are I have the same reoccurring payments that go out for the company, especially you like paying the electric and gas bill Paying for the water bill, etc Those are all very common expenses that are always recurring. So those automatically get categorized So it makes it pretty easy to do now once we have all these lined up and into all these ledger categories We produce a monthly profit and loss statement. Now. This gives me a snapshot of where my company is I know whether or not we made money that month I know if we lost money that month and I've always said the profit and loss is one of the more important ones to me Because I care how much money we make not exactly how much revenue comes in But it's the aggregate leftover. So you put all the money out and all the money in what's left over to me Is what's important because I've seen companies brag about making millions and millions of dollars But if they're spending more than they're taking in it doesn't really matter because at the end your p and l is in the negative Now p and l's and I've talked about this before can go in the negative Because especially because we do project-based work Well, sometimes a project may ramp up and we have to put out money for materials and vendors and contractors to get a project started And that check hasn't cleared and if that split happens, for example The end of one month and the check clears in the beginning of the next month Well, now we have a what appears to be a loss, but we'll have a big gain in the next month So that's why when you are using a tool like this you look at it over time to figure out We are like a three-month snapshot six months, etc. And that's one of the ways they look at it Now the other part is a transaction statement that we produce out of here And this is how we present it to my accounting firm the transaction statement tags all the transactions in out Literally the money went and it has a general ledger code next to them And my accountant has my list of gl codes Therefore they can match and confirm that I put all the place put all the expenses in the categories They want they can look at my profit loss summary And what they're doing is I call it the blessing of the books as in they look at it They put it on the proper government forms that it goes on both state and federal and everything gets paid Now to look a little bit at the key my money program I'm going to blur this out and show all the transactions, but we'll filter it real quick So you kind of get an idea that there's a lot of different vendors in transaction here There's just so many different things in here. I'm not going like I said it show in detail But I will show you pizza hut because I mentioned them. So yes, we buy things from pizza I'm covering up the details of said transaction But you can see the few times you've offered pizza at this program Despite having quite a number of years of transactions inside of here is able to very quickly Go through and find all those transactions for pizza hut number 262 And if I filter it back out a little bit, you'll see there's a couple other pizza huts in there I buy from as well different pizza numbers where we've ordered pizza from Now what this is doing and we'll go back over here to the categories And the ledgers is matching on all of these so I can go through and this is I can't show you all the details As I don't give all my detail transactions away. It could be a security problem but This is like, you know ebay auction payment website payments web hosting void of authorization vehicle expenses travel expenses etc Etc. These are all my general ledger codes. These are all my income codes that come in from money that comes in Whether it was a paypal refund someone paid in the store Certain mobile payments mass payments is actually paypal's category for certain commissions that come in and Companies like to send those via paypal. They just call it a mass payment Then they have some general payments etc deposits that come in credit card and then from here You know, I have that all broke down in detail. So I'm just doing a matching on all of it So overall these two tools are all you really need to Have a summary of your month end and everything else Now is it going to produce really fancy balance sheets? Not really because you'd need to enter all that information there And I still leave that part out to my accountants. I trust them to do that They know how to produce a balance sheet much better than I do. I maintain that the company is profitable I maintain that we have all the expenses put into the right categories And then I use an outside accounting firm for it But a lot of people that's my accounting process seen as I don't use quickbooks And it's no more complicated than this all those bills that come in we pay them as needed Of course, many of these things are on autopay Actually majority of them anytime I can I just set up an autopay on there and verify when I look at the bill Yeah, the bill's about right and things like my, you know, electric bill There's not a lot of wiggle room to argue with them The same thing with my msp billing for any of the tools that we buy for example We use solar winds the recurring billing with solar winds Same thing we audit it on a per invoice basis But what this can do is because all the solar wind bills are in here If I see any changes over time I can dig into it and kind of figure out there's any flaws And this is one of the advantages this has because you can produce once you have all the data in here And this program works very very fast as you can see on my laptop here I'm able to whip up different reports. I can go back and I have over seven years with the data in this I can jump back and forth in time look at trends over the last seven years Summarize any vendor and create custom reports came my money's a great tool. I have a more in-depth review I would do a new review of it, but it's a little bit challenging And I haven't had the time to do because in order for me to really give a good review I like to show how the import process works and how you move the data around in it But I have to create a bunch of fake transactions to do that because if I showed my real transactions It would be a security risk because if you knew certain payments at certain times and had all the transaction information Perhaps you maybe would try to spoof being my bank. I don't know it may be an edge case But I don't want to really risk any of my finances on here But I don't like talking about the process by which we follow because I think some people may find it interesting This tool is free and voice engine is open source and free You do have to pay for the hosting wherever you plan to host it But the key my money program if you want to use it even for your personal work It's free. Um, it's open source and available on both windows and linux I personally use it in linux now It is a local only program But it does have some options if you ever wanted it instead of having it all stored locally It does have options to connect it to a sequel instance. It's got a few backend options They haven't really played with that feature of it, but it does have some expandability options It does have some plugins, but I haven't really paid with those either But um, maybe one day I will but for almost what I just don't need them because we don't use it to write checks I will admit we do still write some checks here. Now the final thing I'll talk about For when it comes to the accounting process that we have is what about individual jobs? Well, we break those down on an individual individual job basis as in we create a spreadsheet and a template That's just really simple where we take all the Expenses and all the costs for the job on one side of the sheet and we'll have what we build for And the materials and all of our costing that we sent out the quote in invoice ninja And then we'll do the job and then we can look at an individual project basis So we still use different spreadsheets the other nice advantage of having everything I came my money and invoice ninja Is it's really easy for either one of those to export all the data into different csv or even standard xls files just grab that Grab those data files and start manipulating them and do some type of special reports if needed And I don't have that many special reports Mostly we look at job profitability on a job by job basis and my overall trends on my profit loss are the two You know good indicators that I use for my business So hopefully someone finds this useful or maybe you don't I don't know leave some comments below or Have a more engaging discussion about this over on our forums. 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