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In spite of people like us, whom look to provide a web based accounting product easier to use and simplifying many processes, at the end of the day the responsibility of the bookkeeping for your small business still relies on YOU.

That’s right. It’s amazing that in this business, we find that there are some businesses out there that still manage to go all year without entering a single entry until the end of the fiscal year where then there’s a mad scramble to fill in whatever entries there were for the entire year. Call us crazy, but that’s just nuts.

So with the New Year, perhaps one of your new resolutions for this fiscal year is to:

• Schedule out a set time slot every month to manage your books.
• Hold that schedule unless there isn’t any accounting to be done.

It sounds strange, but no matter how boring it sounds, or how difficult it may be to put in a few hours in the middle or at the end of the month, you’ll thank us later. Because nothing drives a person mad than trying to figure out whether or not the receipt from last January was part of a project expense or just a petty cash purchase.

One of the ways to alleviate costs in a small business is to leverage open source software. Everyone does to a degree, and some do it better than others. For example, our online accounting business uses open source within the application itself as well as mail servers and operating systems. There are plenty of instances that the open source software results in better features than the paid software applications.

There usually is a caveat though with open source. While they are community driven and supported, you have to be able to man the help station yourself and be proactive in finding the solutions to your particular issues. It also could be that your issue is explained in a very technical fashion and you have to be able to at least learn enough to disseminate that information. This makes certain choices more viable than others depending on the small business owner’s comfort level with technical documentation or sometimes lack thereof.

If you feel comfortable in the technical realm to use certain open source tools, there are many to choose from if you only take a few minutes with your favorite browser and look for the subject + open source. It has definitely helped keep our costs lower which is one of the reasons we can pass along the savings to our clientele.

It’s interesting that even those in Redmond are seeing the writing on the wall. Cloud computing is here to stay and this is reinforced by the fact that one of the major league players in the software application development world, Microsoft, is launching an online version of Office 2010.

This move not only justifies where small businesses are going, but it also shows that pretty much everyone is moving towards an cloud driven world where your applications do not exist on your own local machines anymore. Obviously, this still requires you to have an Internet connection of some sort and the move to a cloud based solution is a difficult one still for many to swallow in the development world. But with Microsoft making the leap, it actually shows that almost all of the major software developers are now backing cloud based computing.

One of the significant key moves here is that the company that hosts the cloud now has full control over the versioning. No longer will you have support questions that are determined by older version A, B, or C but instead the questions will start migrating towards actual usability and functionality. This not only creates ease for the support staff, but it also helps the development cycle flow better.

Small businesses benefit from all of this because the cost of doing business on a cloud based system is inherently less than a desktop system. After you have calculated all of the costs associated with data retainment, the answer is simple when it comes to choosing what to use for your small business accounting, office applications, and the rest. This move by Microsoft signifies not only a competitor-driven move towards Google Apps, but the fact that Google Apps is actually making a difference. Welcome to the age of cloud computing.

One of the ways to keep your costs in check when you begin with a small business is to get acquainted with web-based products. There are many out there to choose from and the brilliance of it is that what it requires from you is an Internet connection. This way, you can conduct your business from any computer, anywhere in the world. If the computer that you were working on crashes, you probably won’t have to worry since the data is safely stored on the Interweb.

Having been a small business owner, I can definitely tell you the amount that I have saved in using web based services is incalculable. One of the cost effective moves I made was to move a lot of my administrative costs such as email and business office tools like my small business accounting to web services. This allowed me to conduct my business anywhere in the world while I traveled and didn’t have to carry a heavy duty laptop. Instead a netbook, or mobile device was all I needed to keep on top of the business while at conferences and meetings. And you can find Internet service pretty much anywhere in the world through hotels, coffee shops and Internet cafes.

Online services in the end provide a way to streamline your business costs into manageable amounts a month instead of huge fees that hit you on an annual basis. And when your monthly service fees multiplied by twelve are less than your previous annual fees, that’s when you realize that there are products out there that you should be avoiding unless there’s an absolute need for it by your business.

When you start an Internet based business, there are several steps that you have to make sure that you follow. Don’t get me wrong, there’s a lot to do, but these are a few of the major things that you should never miss out.

The first is to incorporate your business. This will make you official with the state. Being official also means that the state is now tracking where you’re going and if you will owe taxes and such.

I would also recommend getting an EIN number from the IRS. This is like your social security number for your business essentially. So it’s very important not to just toss this number anywhere and keep it safe just as your social security is used for documentation and forms but you don’t put it on your checks.

The next thing I would do is to find out what taxes and business licensing you will need. Depending on if you’re in retail or not, will determine what taxes you need to pay and licenses you need to obtain for operation of your business. You should probably determine what sort of small business accounting software that you use at this moment since it’s important to keep track of everything in your books in case the IRS comes knocking with an audit. Then you have evidence of how you spent your money getting the right documentation and such which hopefully will reduce your risk of any fines.

Finally, I would look at the tools that are needed to start the eBusiness itself. Most of the time, you’re better off with a lot of the free or open source tools if you understand how to manage them. If you do not, there are many inexpensive and/or free services out there for business use. From email to collaboration suites, it’s all out there. These keep your costs low and allow more of your funding to go towards establishing your business itself.