As with all successful ventures in life, a little bit of work each day or each week makes the work a lot easier. The hard part is creating the habit every day or every week in order to get the job done. You eat a roast one bite at a time, so why do you try and handle a years worth of receipts on April 14th while you are hold with the Turbo Tax support line trying to figure out why the installation didn't work. Lets start by eating last years roast now, and get started on our 2010 roast also.
The system is very simple, and the difficult part is getting people to spend the time every day. One of the paradoxes of organization is you get more time. When you have more time you are tempted to take on more work and at some point lose your connection with the habit that created the time. I jump up and down and scream and yell at business owners when they do this. A well run business is like a well designed watch. It isn't a lot of effort to make the business run well when it is run well.
This is exactly the system we built for our clients. You can send us an envelope with your receipts and a check or you can follow this simple system.
Are you ready for this?
The three main things to do are: 1. Buy the equipment, 2. Set up the system, and 3. Start building your habits. If all goes well tax time in the Spring of 2011 will be as simple as: 1. Install Turbo Tax, 2. Fill out your information , 3. Import the data from Quicken or Quickbooks and 4. Click e-File.
1. Buy the equipment. 3-5 hours total if you go to Office Depot, less if shopping online.
First you need a computer. A mac is OK, sadly Quickbooks is much better on the PC for some reason, and therefore everything here is related to the PC. If you own a business, you can get a little HP PC and use it just for accounting and the costs won't be that bad even if you are a Mac shop. 
The next thing you need is the software, I will admit although we aren't a "certified" Quickbooks partner but Quicken and Quickbooks are the only way to go. They really should send me a cut.The second thing you need is scanner. Neat Receipts used to be a requirement for our clients but the new Quicken has an attachment feature so you can scan the copy of the important reciepts right to the Quicken line item with a right click and and a scan. The HP 6100 series all in one printer-scanners have been tested and so have the big xerox all in one network scanners and they work fine.
Finally you need either three or twelve file folders. I like simple so three is plenty, and if you want more than you can use all twelve. My goal as a business coach and environmentalist is to aim for a zero paper office. Less storage means more efficient use of office space and less waste. 
So the shopping list is really this easy, and you probably can use what you have already if you like.1. Small PC 2GB ram suggested, the scanners are slow if you get less, with Monitor and keyboard. If you can afford it and have the desk space, get a Quad Core PC and Two 24” monitors. We like the HP PC's and Samsung monitors. If you are going to hire someone, get smaller monitors for easier remote access.
2. Copy of Quicken (Home Use), or Quicken Home and Business (Small home based business) or QuickBooks (You have an office and 1 or more employees)
3. Scanner, (suggest network ready so you can grow)
4. Three Pak of file folders.
That is all the equipment, software and materials you need to make the system work. Not too bad is it?
Set up the system. 2-3 hours
If your PC is new, the most time may end up configuring the PC. Quicken and Quickbooks both load reasonably quick and so do most scanner applications. After loading Quicken or Quickbooks on your PC, start by entering your business information. The only question you need to know now is "Cash" or "Accrual". If you are just starting out, consider selecting cash basis, you can always change to accrual later. If you find you need to go the other way is a lot more difficult. One of our advisers says this, "Your books should be 'cash' basis, your filing to the IRS should be 'accrual'." Quickbooks lets you do this.
Next, it is time to connect your checking, savings and credit cards to your Quicken or Quickbooks software so the automatic updates are working. This greatly reduces the workload and will pay for the software within weeks. If you haven't done it, I would suggest stopping here and separating your credit cards for home and office. I realize it is overkill, I have two American Express Credit Cards and two Master Cards. One each for home and one each for office. It makes life much easier when sorting reciepts.
Test the scanner to make sure the accounting software will talk to the scanner.
Here is the process as we run it for our clients first, and my household second.
Start the habits. 1-2 hours per week, 8 additional hours at the end of the year to do everything including taxes if you follow this.
The first step in making the system easy to use is to convert every vendor and every bill possible to online or electronic. Sending your invoices via e-mail, and accepting ACH (electronic) payments from your clients reduces your paperwork clutter right off the bat.
The next step relates to credit card receipts. Every time you buy something, write the tax code or cusomer line right on the top. For instance every time I have a sales meal, I write Meals 50% at the top. If I have a staff meal, then I write Meals 100% on top. If I stop at some big box store and buy parts for a customer I write COGS-Customer Name.
As a business owner or manager there are some basic accounting concepts you need to understand. COGS or cost of goods sold is one of those concepts and knowing the legal difference between 50% meals and 100% meals is another. The list really isn't that long, and most are pretty obvious like vehicle fuel and maintenance. A little practice and it becomes second nature. If you want to make things like fuel easy, get a fuel only credit card for each company vehicle and that item is automated too.
At the end of each day or the beginning of each day whichever you choose, all of the receipts go into an envelope that is mailed out to us each Friday, for you, pick one day each week to schedule one hour or so to get these receipts entered. All of your checks go in this envelope too. The three folders are for the current month and the past two months receipts.
When you sit down here is the checklist for the receipt box each week. If you have a very small business, you can try monthly but my experience is no-one can create a "monthly" habit since bills are due on a different day of the week each month.
1. Run all bank updates
2. Compare all receipts to the bank download and accept.
3. Any receipts that aren't downloaded go back in envelope for next week
4. Any receipts that have a chance of being returned or are of high value are scanned and attached to the Quickbooks entry line.
5. All receipts go to the folder for the month
6. If it is a new month, all receipts are shredded and the folder moved to the front for the current month. If you haven't returned it in 90days you probably won't, and it it is important you have a scanned copy anyway.
7. Pay all bills due that week, print whatever checks are needed and try to get those vendors on electronic payments.
8. Deposit all checks received the same day entered.*
If you do a high volume of credit cards or large checks you will need to create an account for "undeposited funds". When you take a credit card or large check, there could be five days or more before you actually can spend the money. The best way to stay out of trouble here is to use the undeposited funds account to track the money until it actually clears your account.
That is it. If you want to see how your business is doing take a quick look at both "Cash" and "Accrual" reports. You need to know both to understand what your business is doing. If you don't know how to read the reports, pay for a consultant or accountant to spend a few hours helping you out. The stuff isn't that hard if you'll take a little time to learn how to read it. Knowing how to read your reports might save your business.
As your business grows, this system can be taught to some pretty basic employees. As long as you keep track of the weekly reports, you will notice if anyone is doing funny business with your money just like you notice the receipts that don't match. Every business owner should keep an eye on their books. Like I said, I have noticed employees charging gas for their personal cars when no one else did. I also noticed that one employee was using a lot more wire than other employees, and found him on a Sunday doing a "side job" with our wire.
For your home bookkeeping the system is about the same, but we run it monthly. The first Saturday is our “financial day”. Working or not we spend that night getting it done and looking at our month past, and month present. You will be surprised what you find. We found my two favorite self serve restaurants were adding a dollar and rounding up to the next higher dollar. For example, if I bought a $12.21 Pizza, my credit card would be charged $14.00. Sorry folks, I don't tip when I order at the counter and bus my own table. Getting charged another buck and change without every knowing it isn't cool.
Recently we realized that several vendors we used who asked us to use Paypal were charging a "surcharge". Unlike regular credit cards that prohibit the practice, Paypal doesn't and even has a line for it. As a business owner I like it, as a customer sorry, we'll use AMEX and I'll take the miles. You just never know what you will find.
When you look at this process it looks like accounting can be handled by a teenager. The truth is with the right set up, a teenager can do your accounting, just keep an eye on the books or you might end up spending a bunch of money on iTunes.
- Scott Bourquin
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Thank you for your insights.