Keeping your books up-to-date is important to almost every business. Super small, freelancers might be able to monitor their bank account to know how they're doing but it doesn’t take much activity before you need to use an application like Xero to understand what you're bringing in and where your money is going out.

Are you profitable? What tweaks can you make to increase your profitability? Can you afford to hire help? 

All of these questions can be answered with timely and accurate bookkeeping.

As you start, you have to do it yourself. Eventually, you'll become too busy and won’t have the time to stay current. Automating as much as you can, will help you keep useable numbers until you get large enough to bring in the experts. 

So, until then, be sure not to fall into these bad habits:

Falling Behind

Be consistent and stay up-to-date with your coding. If you delay a week, two weeks, etc. it’ll start to weigh on your mind and become a more painful process than it needs to be. 

Using apps like Xero, bank and credit cards feed directly into the app. You can use the Xero's website or their mobile app to code transactions. Setup Rules for predictable, recurring transactions, so they’re already coded. All you need to do is hit OK. 

Xero Rules.png

If you encounter a challenging transaction that you don’t know how to handle, reach out to an expert. Don’t code it wrong as it’s harder to go back later and correct. Have an outlet for quick answers so you can move right along and code it right.

Some very small businesses have accrual requirements that can get complex. If you have one of these businesses, you may need more help, and sooner, than a company that has more simple requirements for accurate reporting. 

Invoicing Late

You’ll find out right away that the term “cash is king” is valid for all businesses. Unless you have significant funding, you’ll be depending on your customers paying you timely. They can’t pay you if you haven’t invoiced. Never delay on getting your invoices out. 

Setup automated payment reminders using apps like Xero, so you don’t have to remember to follow up and remind your customers to pay manually. If the amount is the same each month, use Repeating invoices, so it runs automatically. Run an AR Aging report to see who’s behind and don’t be shy to call and ask for payment. You’re not here to run a charity (unless you are running a charity).

Devise payment arrangements where you are paid up front or in phases versus the transition model of paying after you’ve delivered the service or good. Deposits or milestone payments before you continue work are good practices, so you’re not chasing down receivables when the work is performed. Collect credit cards so you can process payment automatically using apps like IntegraPay.



You’ve heard the term garbage in is garbage out. That’s true with accounting. We’ve inherited books where running an Income Statement or Balance Sheet is useless. The data isn’t wrong; there are double entries, missing transactions, paid receivables that still look open. You get the idea. 

If you’re stuck, ask for help. To use an extreme example; it may be better to start from scratch than to record year after year of wrong information and have someone come in to clean it up. I joke a bit, but there’s some truth in there. It can cost thousands of dollars to clean a set of books. 

Find a partner to help you get it right. It’ll give you peace of mind in the now and will be one less problem to deal with when you scale. 

Poor Records

Nobody enjoys documenting and filing. Setup automated systems to help you maintain proper records of your transactions. Credit card statements are not enough to support your books. You need to receipts, agreements, confirmations at the transaction level.

Apps like Xero, ReceiptBank, or Hubdoc are designed to help automate this process. You may not need it now, but when the time comes to bring on a partner, merge, or get acquired, you’ll wish you had everything in place to complete the transactions. We’ve seen business acquisition, and partnership attempts fail due to delays in getting their I’s dotted and t’s crossed. How do you think your potential business partner will feel when you’re searching your Gmail for accounting records. That doesn’t exude confidence in your ability to run a business. 

Mixing Business with Personal

Unless you plan to freelance on your own forever, commingling your business and personal cash is a bad idea. On day one of your new endeavor, it’s not a big deal. Once you start getting traction, you want to make sure you have business bank accounts and credit cards in place and feeding into your accounting system. Keep business and personal separate from the start, and you’ll train yourself good habits right away.

One of the hardest thing for a bookkeeper to do is clean up a set of books mixed with personal transactions. 

From a business perspective, how will you ever be able to tell how your business is performing with video games or designer shoes running through the business? If your goal is to run a profitable, scalable, multi-million dollar business, start acting the part right out of the gates.

Avoid these bad habits early, and you’ve made substantial steps in building a successful business. 

If you’re ready to bring in the experts to take this off your hands and provide you with timely information and insight, reach out.


So You Are Getting A Tax Refund


So You Are Getting A Tax Refund

For a small business owner receiving a tax refund can be a big boost.  The cash infusion can mean updated improvements for your business, and a new outlook on the future.  You now have options that earlier might not have been available such as creating an emergency fund or rewarding your employees. No matter how you look at it, the infusion of cash could allow you to make significant upgrades to your business. Treat this as an investment opportunity that can improve your livelihood. A recent Xero blog discusses seven ways a small business owner can utilize a recent cash flow such as a tax return.



When To Work With Your Tax Preparer


When To Work With Your Tax Preparer

We’re in the midst of tax time. For tax professionals, it’s called “busy season."  One major deadline has passed, and another is coming in two weeks.

Although we do not offer tax preparation services, we do get many questions about the data the tax preparer will need. We work closely with our customers and their chosen tax preparer to ensure a smooth tax filing process.

Spring Deadlines

  • March 15 - Partnerships & S-Corporations
  • April 17 - C-Corporations & Individuals

First of all, make sure you’ve already filed either the final 2017 return or an extension if you’re a Partnership or an S-Corp. That deadline was March 15th. An extension gives you six months (due 9/17th of this year).

There is no shame in extending. In fact, about half of our customers extend. This extension doesn’t mean you don’t need to pay for another 6 months. The government wants it’s money now. The extension allows you more time to finalize your numbers.  

Overall, it’s best to start the conversation with your tax professional well before the 3/15 deadline. If you wait too late, most tax preparers will be too busy to do anything but file the extension. If you plan to file on a specific due date, make sure your accounting records are ready early and discuss your plans with your tax person.

Fall Deadlines (Extensions)

  • September 17 - Partnerships & S-Corporations
  • October 15 - C-Corporations & Individuals

These are your final due dates. You can file at any time before these dates, so don’t think you need to wait until the actual due date. I’d try to file well before these dates if you want a better experience with your tax accountant. If you wait until the due date is very near, they will be overwhelmed once again and harder to get ahold of.


Prevent surprise tax bills by talking to your tax preparer before the end of the year. I’d recommend around mid-November. Share with them how your business (and personal finances if you own a pass-through entity) is tracking so they can give you actionable advice before 12/31.

The most common disappointment we hear from customers is a shocking tax bill. Be prepared and work with your tax professional in advance. Ask for the time to talk, don’t wait for them to reach out.


Accountants Are Not All Apples


Accountants Are Not All Apples

One of the greatest challenges we hear from prospective customers is to understand what we deliver to our customers and being able to compare that to other accounting options they have discovered.

Basis 365 was created to deliver a unique, outsourced accounting experience to small businesses by providing a virtual accounting department using cloud-based accounting applications. Many business owners didn't even know this existed and were comparing our pricing against bookkeepers or CPA firms and not understanding why there were such extremes.

We've created a helpful chart to understand the pros and cons of the options as we see them. Not only has this exercise been useful for prospective customers, we found it useful internally to ensure we continue to hit full stars in these critical areas. We have previously written a blog about each of the three alternative options in more detail that may be of use.


Applicable for small businesses ranging from $1mm - $20mm in annual revenue or from 5-100 employees.

Although we love the simplicity of the above chart, we understand that some of the terms listed may not be intuitive to everyone. You'll find a deeper dive in to each item we scored below.


Growing businesses require employees to wear multiple hats. Running an accounting department involves basic bookkeeping knowledge to code simple transactions, college-educated accounting knowledge for proper accruals, and controller-level skills for budgeting/forecasting. Although that's a simplified description you can see the challenge.

Business owners have a few options to consider:

Bookkeeper: Save money and hire the lowest skillset required. This limits the business's ability to grow as that person will be unable to handle higher-level tasks. The bookkeeper-only option will be part of the bottleneck of the business's growth.

Controller: Pay for the highest level of skills required. You now have a highly-educated professional performing low-level tasks. They'll enjoy the more complex work and will be bored out of their mind on the low-level. They won't see much room for professional growth unless you have them tied to equity.

CPA firm: CPAs are generally going to be the most expensive option. Although very highly trained, they tend to bill by the hour, discouraging you from speaking to them to avoid surprise invoices and tend to only handle the books for their customers to keep their tax professionals busy. Come tax season, you'll find it hard to get in contact with them regarding your books.

Basis 365: We are not a CPA firm and therefore do not have a "busy season" where customer service wanes. Our customers have a team of 2-3 with skill sets appropriate for the work being performed. This blended approach is the best of both worlds. The only way to replicate this approach yourself is to hire a part-time team for each level in your accounting department which isn't easy. You won't find many people who are willing to work part-time for any length of time for each accounting function.  

Business Advisor

Accountants are usually pigeon-holed as either tax preparers or bookkeeping bean-counters. The industry tries to change this perception but the problem still exists. For a business with one owner, bean-counting may be enough. When the business grows to 7 figures and you've hired more than a few employees, things change.

Your financials are no longer just telling you what's in the bank but can tell you what may be coming in the future. They are starting to tell a story about the business. Your accountant should be able to tell you that story and talk about what areas you can change to improve business performance.

Bookkeeper: Being at the lower level of skill, companies will find it hard to find a bookkeeper that can provide such insight. It is difficult, if not impossible, to start running scenarios without proper accrual accounting. Bookkeepers tend to understand some of the basics of accruals, such as Accounts Receivable but often don't have a degree in accounting where those concepts are expanded upon.

Controller: Qualified Controllers should have a solid understanding of accruals and in helping budgeting/forecasting activities. We say qualified as there are many bookkeepers that have been given the Controller or CFO titles that are not really performing the accounting tasks typically attributed to that title.

We have assigned 2-stars to this role because, although they have the accounting chops, they may not have experience in running a business and may lack on providing business advice being the accounting. Many accounting professionals prefer to stick to the numbers and shy away from painting a broader picture.

CPA firm: CPA's should, within the firm as a whole, be able to deliver business advice beyond the numbers.

Basis 365: Similar to a CPA firm, we work across 100s of customers and have built up a collective knowledge to provide helpful advice in many areas. Although we are not experts in all areas, such as HR or business law, we see enough to identify areas to consider and recommend experts where needed.


Accrual accounting is an underrated accounting term that is not well known outside the industry. Without getting into an in-depth explanation, which it deserves, the overall concept is to try to match revenues with expenses so that the financials show some level of consistency.

A simple example is Accounts Receivable. Cash-basis accounting will record the revenue when the deposit hits the bank. If you perform the service now and get paid 3 months later, having that revenue hit three months from now when you incurred the expense of performing that work today would result in unhelpful financial statements.

That example is logical and makes sense to non-accountants. There are many others that are more arbitrary that a qualified accounting will record. It's hard to budget or utilize trend analysis without accrual financials. This is why we utilize accrual accounting for all of our customers.  

Bookkeeper: Expect to see common accruals like Accounts Receivable and Accounts Payable. They may properly accrue payroll or notes payable.

Controller: Controllers should pick up almost all accruals. Possible exceptions may be the most complicated GAAP accruals that revolve around financing or equity transactions.

CPA firm: CPAs should be capable of full GAAP accrual financials.

Basis 365: Accrual accounting is at the core of what we do.


Small businesses, especially those in the tech or e-commerce space, can grow rapidly. Translating that into the accounting, utilizing cloud-based applications that integrate with each other is key to a scalable solution.

Similarly, the team working on your accounting will require certain skills as the business changes. Everything we do is about automation and constant refinement. Our goal is to eliminate manual inputs to reduce error and allow the business to expand or contract with limited impact on what we do and the related costs.

Bookkeeper: Will be most comfortable using Quickbooks’ desktop software, will be expecting to come on site to process paper-based transactions, tend to just learn how you’ve always done things, and will be a team of one. As the accounting requirements increase, they will not be able to grow with you. Many part-time bookkeeper experiences end with the bookkeeper just not showing up for work.

Controller: Exactly the same challenges as the Bookkeeper model except they will give you 2-3 weeks of notice before leaving. Working on more complex financials, they tend to not document procedures or maintain proper GL reconciliations. Things are “in their head” and are hard to transition to a new person.

CPA firm: Also very comfortable on Quickbooks desktop and other older software applications. CPA’s are known to “do things the way they’ve always done them” and do not adapt well to change. Even if they say they use Xero, they most likely have 75% or more of their customers on Quickbooks. CPA firms do have a staff of accountants so they can ramp up team members if needed.

Basis 365: We maximize cloud application integration and are constantly researching new technology solutions to ensure the accounting can evolve with the business. We can bring on team members for certain functions as needed or ramp down if that’s the unfortunate situation the business is in.


One of the more common scenarios that force business owners to contact us is that their current accountant is leaving or stopped showing up. Two-to-three weeks notice is not a lot of time find a replacement and get them trained. This is especially true when the transition requires the outgoing accounting to “explain” everything to the new hire from memory.

Business owners don’t want to be in this situation again and are looking for an alternate solution to hiring.

Bookkeeper: The least reliable of all options, bookkeepers will not solve this challenge. This group is most likely to just no-show, leaving everything at a standstill.

Controller: The most common option of offering 2-3 weeks to find and train a replacement. Posting a replacement, coordinating interviews and making the right choice usually runs beyond 2 weeks, leaving you very little time for training.

CPA firm: CPAs do tend to document well. The challenge here is that many CPA firms only do bookkeeping to keep the tax staff busy when there are no tax returns to file. CPA firms make 80%+ of their revenue on tax work so don’t expect your books to take priority over that. Expect to see your CPA go MIA during Feb-Apr and Aug-Oct.

Basis 365: We only offer outsourced accounting services. There is no busy season to distract us from your accounting. Our customers have a multi-member team with documented procedures so we can drop in a new team member painlessly.


Accounting is a very broad field. No accountant knows everything. The internet is a powerful tool that allows anyone to quickly research areas they are not familiar with and learn what is needed. This can sometimes result in incorrect interpretation or utilizing research that isn’t correct or isn’t really the answer to the problem you’re trying to solve.

It is helpful for accountants to discuss situations and work out a collective answer, pooling everyone’s knowledge for the benefit of a customer.

Bookkeeper: Being one person, they are limited to the knowledge they can gain from the internet or perhaps other bookkeepers if they maintain a network. Bookkeepers can assist with basic business tasks but generally do not think like a business owner and therefore sticks to the books.

Controller: Similar to Bookkeepers although they have a much deeper understanding of accounting principles. Their research capabilities should be better but are limited to their own knowledge. Most tend not to maintain a network to pull from and simply go job to job as a solo act.

CPA firm: Firms have a very deep pool of knowledge and should be capable of providing a broad range of value.

Basis 365: Similar to a firm, we have a large team that collaborates daily with our customers and each other. Our culture engrains the sharing of knowledge in everything we do. Whether it’s an accounting topic, small business question, or software application query, we have learned to ask and share to build a more knowledgeable team.


Growing businesses should be working hand-in-hand with their accounting team. Things come up and need to be addressed quickly. Business owners look to their accountant to play an active role in the business, making suggestions along the way.

Bookkeeper: Many bookkeeping-only arrangements require the person to come in weekly. It is hard to collaborate effectively in such small bursts of time. For businesses that have a full-time Bookkeeper, the collaboration should be much higher.

Controller: Full-time employees should be very collaborative considering they are onsite and there for long periods of time.

CPA firm: Most firms tend to bill hourly and therefore any collaboration that takes place results in a bill. This encourages the business owner and their team to only ask the accountant for things they need and no more. That business model discourages real collaboration.

Basis 365: Our team looks at themselves as an extended part of your team. We want to be a part of the adventure or story of the business. With our fixed pricing model and processing of transactions in real-time, there is no need to limit conversations with our team. Our team is encouraged to chat with our customers to really understand what they are thinking and where the business should be going.

Modern Accounting

Like every other industry, business is changing at a rapid pace. The accounting industry is no different. The traditional paper-based, desktop software accountant is a thing of the past yet a majority of the accounting you may run across as still living there. The industry is notorious for being late technology adopters.

Instead of finding a tax preparer who also does books, business owners want an accounting partner that is engaged and adding value to the success of the operation. Finding an accounting partner that utilizes the most current technology and creating a unique experience should be a top priority for a rapidly growing business.

Bookkeeper: Considering Bookkeepers tend to use whatever is in place, which is usually Quickbooks with some outdated procedures, you shouldn’t expect them to revolutionize your accounting experience with an accounting stack of cloud-based applications and revamped workflows.

Controller: Having a deeper understanding of accounting and commonly full-time, a Controller should be capable of improving processes to generate accurate financials. Still, being an accountant, this person is most likely not very tech-savvy and will stick to the status quo on software.

CPA firm: CPA’s have the budget and team that should allow them to provide a modern experience. Lack of technology skills still abound within firms and the partnership-based business model makes it hard for firms to adopt technologies quickly due to the need for partner consensus. Since most CPA firms that do bookkeeping are primarily tax shops, bookkeeping tends to lag behind and is shelved during tax season. Not very modern in our eyes.

Basis 365: We focus 100% on cloud-based, outsourced accounting. We live in the cloud and are always testing new applications on the market and tweaking procedures for constant improvement. We focus on industries that we know well so we can deliver an amazing accounting experience.  

Best Value

Which option is the biggest bang for your buck? This doesn’t mean which is cheapest. It means which option covers all of the bases to ensure your accounting team is adding the most value to your business.

Bookkeeper: The cheaper option but limited skillset will hold back a growing business.

Controller: Highly skilled and boots on the ground should result in accurate numbers. Being an employee, you are limited to a team of one that costs more than most business owners think. You are limited to the capabilities of this one person.

CPA firm: A deep talent pool allows a firm to handle any complex accounting issue. Most firms bill at 3x or more of their costs and bill hourly so this is the most expensive option. Business model means service levels tend to drop during tax season in the spring and the fall.

Basis 365: A solid blend of collaboration, scalability, and knowledge yields the ultimate accounting experience. We focus on telling the story of a business through the financials and help business owners build a financially solid business that can sustain growth.

Photo by Raquel Martínez on Unsplash


Gusto's New Plans


Gusto's New Plans

We are excited to see Gusto’s newly released plans. The key differences in the two new plans will fill a need for many of our customers and allow them to use one platform to satisfy these requirements versus three. That saves a lot of time and headache.

Here’s a summary of the plan differences. You can find a more details listing on their pricing page.

Gusto Plans and Pricing.png


Not new here, but their core payroll services have been amazing, so nothing new is really needed. Some items have moved from their core service and are not included in Complete. Paid-Time Off is a useful feature that is now in the higher plan.


The primary new feature in the Complete plan is the ability to add onboarding documents like an Offer Letter or your Employee Handbook. This was previously only available to companies with a large number of employees so it’s nice they are now allowing anyone willing to pay the Complete price to access this functionality.

Many customers previously used the free version of Zenefits to handle onboarding documentation so it’s nice to see Gusto has built this in, reducing the need for another application to learn and maintain.

Gusto seems to now be positioned to go toe-to-toe with Zenefits.

Here’s an example of the default Offer Letter editor. Quite easy to use and I am sure functionality will improve over time. Other documents, like NDAs or Employee Handbooks need to be submitted for someone on the Gusto team to insert linked fields. I am sure this will be improved soon so you can add any document yourself.

Screenshot for Gusto Plan changes and Offer Letter Editor.png


One of the most common referral requests we receive at Basis 365 is for HR assistance. Although we handle payroll for many customers, we are not HR experts and recommend consulting with an expert on hiring, firing and other compliance inquiries.

We’re excited to see Gusto has built this into their plans. Since we’ll most likely recommend Complete for most of our customers, the price differential is only $110/month to have access to an HR team. That’s a drop in the bucket.

Although this seems to be a somewhat quite release from Gusto compared to when they started offering benefits, it’s a huge leap for our customers. Kudos to the Gusto team for constantly improving and rolling out solutions our customer’s need.


TransferWise, for the Global Business


TransferWise, for the Global Business

Small businesses don't always mean local businesses. We all know we live in a global economy. 

We are often asked by our customers what is best way to send money internationally. There isn't one answer that works for all situations, but the best solution we've found that covers most situations is TransferWise.  

TransferWise let's you setup a Borderless account that can then route money to any of their supported currencies. Pretty cool. Below is a visual from their website to help you see how it works.

You can send money from one TransferWise account to another, as in the example above, or from your TransferWise account directly to a bank using the usual accounting number / SWIFT codes.

The cost to transfer money using TransferWise is quite reasonable. You can experiment using this tool to see what fees you would incur.

The process to set up an account takes a few days and is quite easy to do. You may want to talk to your bank to see what options exist as a comparison but make sure you compare apples to apples and know what both sides will send/receive. 

Here's a little video that explains how some of the tricks of the trade work in the exchange business.


Meet IntegraPay, the Killer Merchant Service Platform Fully Integrated with Xero


Meet IntegraPay, the Killer Merchant Service Platform Fully Integrated with Xero

Most small businesses take payment from their customers via credit card. Any business should look to collect cash as fast as they can and credit cards are a great way to do that. The 3% is worth the time and effort it would take to collect outstanding invoices (see tip # 2 in our top 5 things to do now for your business). Business owners also benefit using credit cards that provide miles or cash back. It's a win-win.

The most common merchant service provider we see, by far, is Stripe. For recurring business that need to scale like eCommerce or SaaS, then Stripe is probably the best way to go.

Following the recurring revenue business model trend sen in other industries, service-based businesses are now implementing similar service offerings. Xero and other applications integrate with Stripe but that requires the customer to pay each month. The goal is to not have to wait.

IntegraPay has come up with the perfect solution, integrating directly with Xero!

IntegraPay does a some other cool things, but here are the top 3 reasons why we would recommend the solution. 

  1. Auto-debit - When you link a Xero invoice template with IntegraPay, IntegraPay will charge the card on file once it is sent. Not need to run it in Xero and then log into another system to ensure the charge runs. This is massive. 

    You can use it on a one-off invoice but the power comes in setting Repeating invoices in Xero to Approve & Send. You've now automated that process on both sides. If you need to modify the recurring charges, you only need to edit the Invoice. 
  2. ACH Pulls - You now have the ability to pull the amounts due via an ACH pull. This cuts down what you were paying for credit card fees of around 3% to almost nothing. If the customer is OK with pulling the amounts, which makes sense for consistent, recurring charges, then that's the way to go. 
  3. Reconciliation - IntegraPay provides detailed instructions on how to setup Rules in Xero and account mappings so the system almost reconciles itself. Invoices are marked paid automatically. For customers who you do need to click a link to make payment, the functionality works just like Stripe so you're not losing anything by switching. 
Screen Shot 2017-08-24 at 5.26.57 PM.png

We're looking forward to seeing how else IntegraPay can automate our customer's cash collections.


Managing a Remote Team Using Lattice


Managing a Remote Team Using Lattice

As an outsourced accounting provider who lives in the cloud, our entire team are remote. We used video and chat tools to collaborate as a team like Zoom and Slack, but that wasn't a complete performance management experience for us and the team.

How do our activities tie to our company goals of customer satisfaction? How do we remember what kudos we've given via Slack or on video so we can include that feedback during our employee reviews.

Enter, Lattice

We see lots of apps, many of which look perfect at first glance and then fail to tick all of the boxes we need. Every once in a while we find one that just fits. 

When I reviewed what Lattice did I found it solved an issue I really didn't know we had. The signs were there, but we didn't know what we didn't know if that makes sense. 

Lattice performs 4 primary functions:

  1. Reviews
  2. Feedback
  3. Goals
  4. Check-ins

Annual reviews & Goals are common enough in HR employee management systems. We needed a solution there but were most excited about the Feedback and Check-ins features.


We like to send the team kudos when a customer shares their experiences. Employees also share their thoughts on how other members of our team perform. We didn't have an easy way to capture that information in one place for all to see at the time, and later when you need to recall what a team member has done.

Lattice has a Gmail plug-in that allows us to enter feedback right from the email where we see the information to provide feedback about. 

Screen Shot 2017-08-24 at 4.54.10 PM.png

You also have the ability to enter the information directly in to Lattice. If you entered in your company values as we have in the system, you can tag feedback to your values. How awesome is that?


We have weekly 1:1 check-ins with our lead accountants that used to be handled with an email agenda that was discussed on video. It worked, but wasn't great.

Lattice lets us prepare the recurring agendas and let's the employee provide their answers in advance for us to review and discuss on the meeting. It keeps them all in one place so we can easily see what we discussed last week to make sure we're seeing progress. 

Screen Shot 2017-08-24 at 4.58.32 PM.png

Lattice is relatively new but has a great product already. I'd recommend it to any small business that needs a better way to manage their team. We are excited to see what they build in the future!


4 Critical SaaS Metrics Your Software Biz Should Track Now


4 Critical SaaS Metrics Your Software Biz Should Track Now

Fully understanding SaaS metrics is a complex undertaking. Before you take a deep dive into the great blogs from David Skok or ProfitWell, it’s best to think about where you are with your business.

It’s important to note that certain metrics are more relevant in certain stages of your product’s life cycle. You don’t need to become an expert overnight when your app is just going live or an MVP.

As an example, your MVP stage will measure things like feature engagement or signups. You won’t be looking at things like the lifetime value (LTV) of a customer or your monthly recurring revenue (MRR) at this point since you have no paying customers for any length of time.

Once you get some revenue traction, let’s say roughly $20,000 in recurring monthly revenue for close to 12 months, you’ll want to make sure everything is in place so you can track the following 4 key SaaS Metrics:

  1. MRR: Monthly Recurring Revenue
  2. Churn
  3. LTV: Lifetime Value
  4. CAC: Customer Acquisition Costs

Understand these inside and out before you dive into more metrics and variants. Make sure your website and accounting team are capable of tracking all of the necessary data points so everything is at your fingertips when it’s time to calculate the data. This will require collaboration between your development and accounting team.

Although these metrics are generally considered SaaS metrics, there are many service-based businesses, including us at Basis 365 Accounting, that have a monthly recurring revenue business model that tracks this data.

Let’s walk through what each of these metrics mean and how to calculate them. Here’s a link to a Google Sheet I created to generate these charts. Feel free to make a copy and play around with the numbers.


This is the primary driver for your business. Most of the metrics tap into this number. Simply put, this is the amount of monthly revenue you earned for that month for all recurring customers.

You want to exclude one off sales from this number (e.g. training services or setup charges). MRR should only track recurring revenue.

If you invoice customers/charge for more than one month at a time (e.g. pay a discounted amount up front for 12 months of access) then you have deferred revenue. To explain, if they pay you $12,000 for annual access starting in January, you won’t have $12,000 of revenue in January and $0 in the remaining months. Your accountants will record $1,000 of revenue per month over the course of the year.

Try not to only focus on this number as there can be a vanity element to top line revenue. The good thing is, as you can see in the above example, issues with your product tend to reflect negative changes to this number so as you see your MRR drop, everyone will be focused to find out why. However, if your MRR continues to grow, it doesn’t mean you’re doing so in a healthy, financial way. The metrics below will help you manage healthy growth.


Churn calculates what you’re losing out the back door. This number is critical to understand in a SaaS business. It’s impact on your future financial position will surprise you.

You’ll find Churn is the issue causing our MRR to drop in the example above.

Naturally, Churn should be kept a minimum. Your general target should be to keep it under 2%. If not, focus on this metric immediately. Negative Churn is even better but that requires more complex tracking using Cohorts which is beyond the scope of this blog.

Our sample isn’t looking great and our spike in April and June is even worse. Reviewing our MRR chart, you’ll see although we are adding customers, our Churn is causing our MRR to drop over time.


This measures how much profit you receive by delivering your software app to your customers, in dollars, based on the how long that customer will stay with you. You may need to have some customers approaching 12 months before you can start to measure LTV.

You need your accounting team to provide the Gross Profit %. SaaS companies should be someone near 80%.

You can see our churn in April and June impacted our LTV quite significantly.

Investors will expect you to know your LTV as a business owner.


LTV calculated your profit from a customer but there is an associated cost for you to have acquired those customers in the first place. If you keep $2,000 over the life of a customer but it costs you $1,000 to get then, is there enough cash left in the bank to keep the business growing? Maybe. Your outsourced accountants can help you determine the answer.  

In our sample data, our costs start out small and look reasonable enough. As we proceed into the year, we see it ramping up closer to a $600 average.

You need to spend money to gain new customers but you need to have a sustainable ROI. Your accountants need to track the appropriate costs so you can calculate your CAC on a timely basis.


Bringing together what you earn from each customer and what it costs to acquire them, you calculate this metric to determine if you have a business model that’s working. Your target is to keep this number under 3.

Our sample data isn’t looking too good. It’s taking us too long to recover our customer acquisition costs over the life of our customers.

By examining our data, we improved in the summer with some higher MRR months or drops in CAC but the year ended with some issues.

Although our sample data looks a little erratic, we hope this exercise was kept simple enough for you to see the primary drivers for the core SaaS metrics. You’ll want to have a working knowledge of what they are and what actions you can take to improve them.

Keeping Churn down by having engaged, happy users is priority #1. They’ll stay customers longer and increase your overall LTV.

Apps that integration with Stripe or Braintree, which most of our SaaS customers use, can help calculate most of these metrics above. Working with your accountant will provide you with the remaining factors.

Ask your accountants to use a cloud-based accounting system, like Xero, that has an API you can plug in to help automate the process. If it takes hours to compile your metrics, they’ll most likely be set aside when everyone is busy and left untended.

Keep it simple, understand these basic metrics, and automate the computations to help manage your growing SaaS business. You’ll attract investors if they see you truly understand what is driving your business.




Five Things to Do Now to Drastically Improve Your Service Business


Five Things to Do Now to Drastically Improve Your Service Business

Service-based businesses (e.g. agencies, marketing, consultants) are unique in that our “product” is often intangible or knowledge-based. Projects lengths can be unpredictable and the end-product can go through many iterations. As a result, it’s hard to tell how much money you really made from one project to another.

Businesses start with a very small team and a handful of projects so it’s easy to tell who’s doing what, which customers still owe you, and what projects you made money on. As the business approaches $1mm in revenue, it becomes much harder to determine those things without data.

We see all kinds of manual, spreadsheet-based processes that seemed easy enough for in the beginning but is breaking at scale. It’s time for a change.

This is when most of our customers start looking for a solution. We modernize their accounting applications and we help them implement the software applications they’ll need to operate their business more effectively.

Here are the top 5 tips we’ve learned over the years that will have the biggest financial impact on your business:

  1. Invoice quicker – the sooner you can get the invoices out the door, the sooner you will be paid. A manual process where you are gathering information from various sources and inputting invoice line items into your accounting application will delay getting that cash in the door and lead to errors. We have seen some businesses take 3 weeks to get invoices out which means they are floating the cash for payroll for close to 2 months.

    You should have an integrated system where the team tracks their time and project costs in one place and have that system generate invoices automatically and generate the data you need to run payroll.

    If you can switch from billing after you’ve performed the work to charging up front or progress billing, even better. Your goal is to get cash in the door as fast as you can without sacrificing your relationship the customer. Don’t be afraid to try new things. All too often, we’ve seen a business starved for cash when their largest customer delays payment.
  2. Collect faster – once your invoices are sent, make sure you collect that cash as fast as you can. Don’t let cash sit in your accounts receivable. You never know what position your customer will be in 30 days or 60 days from when you sent that invoice.

    Monitor your accounts receivable by reviewing your AR Aging report weekly. Have a clear plan for each invoice you see listed rather than just hoping it will get paid and clear itself off your aging.

    Can you collect credit cards payments up front instead of waiting for a check? That 3% fee may be a net gain if you consider the effort it takes to hunt customers down (that’s not fun for anyone).

    If they must use checks, what if you offered a 2% discount if they pay within 10 days? Could that work?
  3. Maximize profit – don’t focus on top line revenue. The vanity matric for many is sales. Some businesses can sell themselves out of business if they aren’t profitable enough. How profitable do you need to be to build a healthy business.

    At a minimum, separate your labor and expenses related to delivering your service from your non-project related costs like Rent or Marketing. This will give you a high level Gross Margin which tells you how much money you make on all projects.

    Even better, utilize software to calculate profitability at the project level. Do you do different types of projects? Which projects or more profitable that others? Should you focus your team’s time doing other things?
  4. Track staff performance – which team members are more profitable than the others. Do you have the data to see trends in your staff’s performance? Are employees in the same role yielding different billable hours?

    What billable targets do you need to hit to obtain the growth or profitability you want for your business?
  5. Reduce write-downs – are you throwing money away? It’s all too easy for a project manager to feel the invoice will be too high for the customer and write it down. If these are not tracked, you may never know how much money your team is billing for but never collecting. Track this amount and investigate why the time is unbillable. Do your projects managers need a little more backbone? Are we doing things out of scope? Does the team need more training to get work done right the first time?

A fluid relationship between operations and accounting is key to collecting cash fast. Use  the right tools that integrate with each other so you have the data you need at your fingertips to execute the suggestions above.

We’re big fans of automation and streamlined processes. Lose the manual spreadsheets and old tools and consider things like: Xero, Gusto, WorkflowMax, Harvest, or Accelo. Take control of your business and know what drives your numbers so you can reach your goals.

You don’t have to go it alone, reach out to us and let us help.




R&D Tax Credit Changes In Effect


R&D Tax Credit Changes In Effect

Good news for many small businesses. Changes to the R&D Tax Credit rules allow businesses to apply the credit against their Social Security payroll tax liability.

Here’s a quick run down on what to look out for. Overall, check in with your accountants and make sure your tax preparer properly claimed this benefit on your 2016 tax return!

  • Q2 2017 is the first eligible quarter to apply the credit against. If you are using Gusto, you need to input the credit amount by July 15, 2017!
  • Your company must not have generated revenue prior to 2012.
  • Your 2016 revenue must be less than $5 million.
  • You must perform qualified R&D activities that are technical in nature, experimental with uncertain outcomes, and with a purpose of improving a product or process.

The maximum benefit for an eligible company is $250,000 per year. More information can be found on the IRS website.

The above is a quick summary of the tax credit but as you would expect with any law, there are more complicated calculations and thresholds to determine the actual credit amount. Contact your accountant, bookkeeper or tax professional to see if your company qualifies.


Why Xero is our Outsourced Accounting and Bookkeeping Software Application


Why Xero is our Outsourced Accounting and Bookkeeping Software Application

We are asked “why we chose Xero for our customers’ outsourced accounting and bookkeeping” almost daily. In fact, we made a decision when we founded Basis 365 back in 2012 to utilize Xero as the core accounting platform for all of our customers.

Our decision surprised and confounded our accounting peers. They’d never heard of Xero and wondered why we didn’t just use the accounting application everyone else uses … Quickbooks. I must admit, we were a little hesitant in our decision. Could Xero handle full accrual accounting for multi-million dollar businesses? The answer, of course, is an absolute yes! We’re a 100% Xero shop and have never looked back.

We thought it would be useful to business owners for us to document some of our favorite features and benefits of Xero. We’ve polled our accounting team, who live in Xero every day, and our implementation specialist, who helps establish accounting workflows which often times requires integration between multiple online applications (e.g., Gusto, WorkflowMax, Harvest, FUTRLI, Spotlight Reporting and Dear Inventory). We hope this will help others feel comfortable in selecting Xero as their accounting software application.

Here’s a list of many of the features or benefits our team has found with Xero:

  • Ease of Use – The UI is pleasing to look at and easy to figure out. For non-accountants, that’s key. Do you want to have to figure out how to use a complicated accounting application or intuitively jump in and start processing your transactions. For our team of accountants, getting up to speed is super quick. Most have never used Xero but have experience with SAP, Oracle or Quickbooks. Everyone comments immediately how easy and fast Xero is to use.
  • Bank account and credit card feeds – Xero will automatically feed in account activity directly into the accounting system so you don’t have to manually create transactions for all your income and expenses. That’s huge! Only online applications tend to have this feature.
  • Auto-populating and rules – Not only will the activity feed in, Xero will remember how you coded transactions in the past and auto-populate the fields to save you time. Getting even more advanced, you can setup simple and complex rules to code transactions based on conditions. Amazing!
  • Support – Although Xero has a simple interface, something will come up where you need help. Xero has a responsive email support team which is critical for any SaaS company. Their help database is also quite extensive and, more importantly, useful. Most SaaS companies help systems rarely ever have what I need. Xero’s help system answers most of our questions before having to even reach out to their support team.
  • Integrations and Add-Ons - The Xero Marketplace has a massive amount of software applications that integrate with Xero. This is one of the primary reasons we choose Xero as our core accounting platform. No matter what a customer throws at us for their business needs, we can find an application that gets us most, if not all, of the way there to an automated solution. This speeds up our reporting capabilities and reduces the chance of error from our accounting team
  • Find & Recode – One of the most amazing features is the one you hope you don’t need to use. This tool allows you to mass edit transactions and keeps a history of what you changed, allowing you to undo it. Well thought out by the development team.
  • Save Receipts – Xero files allows you to attach receipts to transactions so you can refer back to the detail when you need to. Paperless is the way to go!
  • Xero is Mobile mobile apps for on-the-go accounting allows you to keep things organized no matter where you are.
  • Lots of Reports – Data isn’t of much use to your business if you can’t slice and dice it as needed. Xero has a ton of reports which you can customize and export to Excel, Google Sheets or PDF. Income by Contact or Expense by Contact are some of the unsung heroes in the reports section. The Cash Summary is another great one. Be sure to dig around to find what works best for you.

We created a high-level page about our Xero experience. We’ve spent a lot of time with the Xero team over these years to provide feedback and find out what’s coming next. They’re at the forefront of machine learning and AI research to automate even more for their customers. We look forward to what’s to come.


Tips & Tricks to Working Remotely


Tips & Tricks to Working Remotely

"Woohoo, I get to work from home!"

Home-based offices are becoming the norm (unless you work at Yahoo!®), but like with anything else in life, there needs to be a balance.

I’ve worked in the traditional professional services and corporate office environment and was fortunate enough to work for a company that transitioned a large portion of its workforce to work from home. I was able to manage a team of over 30 professionals who lived all over the country for over 10+ years. Some of my team excelled in this environment and I’ve seen some fail. I even fell into some of the bad habits as well.

Our current team at Basis 365 works out of their home offices, most of them for the first time in their professional career. We like to spend a little time instructing them on what works well so that they enjoy the benefits while still delivering an exceptional product for our customers.

Things to Love

Overall, I believe it provides major benefits to a company and to your employees. So let’s start out talking about some of the benefits of working from home, for the employee and a business.

  • No commute

    Less driving risk, less money on gas, less emissions, and most of all … no road rage! More time with the family and your hobbies.
  • Less distraction

    No game of round robin distraction where someone swings by your office to chat, you’re now distracted and grab a coffee and go distract someone else. It’s an endless cycle.

  • Tax deduction

    There are many rules to comply with but if you have a dedicated office space you have the opportunity to write off a portion of your mortgage/rent, utilities, etc. used to run your business or work from home.

  • Access to talent

    As a business owner, a distributed workforce allows you to find talent you would not otherwise have access to if you are stuck within driving distance of an office. Cost of living is different from state to state and many people are willing to trade off in order to have a better work-life balance.  

  • Lower overhead

    Business owners should have some cash freed up from the lack of traditional overhead expenditures needed to sustain an office. That capital can be reinvested in the business and help you grow.

Things to Watch Out For

With many benefits to choose from, there are temptations. Things that lead to bad habits and can creep up on you over time or take hold right away. These things all require discipline to overcome. The danger is to underestimate these issues. The most happy and successful remote workers have discipline, hands down!

  • Attendance

    Business owners and managers will have a fear that you are not really working. Don’t let them justify that fear by getting to your workspace late or cutting out hours and delivering just enough work to get by. This is the #1 area of concern for your company and should be for you as well.

  • Loneliness

    Humans are social creatures. Being in a quiet room for 8 hours, alone, can be torture. You’ll need human interaction.

  • Attire

    It’s easy to roll out of bed, grab a coffee and check your email. That rolls into a conference call and now it’s lunch. You realize you’re still in your pajamas.

  • Family

    It’s almost impossible for family members and children understand you are working and to keep boundaries. Enforce this at all costs.

  • Costs

    As a business owner, although you no longer have much of the overhead an office-based business would have, if you are taking advantage of talent in various states you will need to set up shop in those states. This legal and tax compliance requirement can be a bit of a challenge as each state is different. This commonly creates accounting requirements to track revenue by state in your accounting application to ease in meeting compliance filings. It can also trigger sales tax nexus in states you didn’t have before.

Tips for Success

I hope the dangers don’t scare anyone away. Many businesses are going this way and for most entrepreneurs, it’s a must. Here are some suggestions to mitigate those risks and come out on the positive side of working remotely and managing distributed teams.  

  • Deliver on time and be responsive

    Overcome the fear of your manager that you’re not working by delivering on-time, every time. Stay in contact with your team at the start, middle and end of your day. If you are late on projects, don’t respond timely to an IM, and don’t answer a colleague’s phone call during work hours on a regular basis then they will assume you are not working as you should. Are you?

  • Build team interactions

    As uncomfortable as it may be for many, use webcams as much as possible. I’m still working on this one :) It’s hard to pinpoint exactly why but it’s hard to build a collaborative team without seeing faces and expressions. People open up when they’re live. They’ll also dress up too.

    Take it to the next level by improving the visual as most people will be poorly lit and staring down. You won’t like how you look and you’ll look unhappy. Don’t have any back lighting and use windows or a lamp to brighten your face. Try to have it hit your face at a slight angle versus head on.

  • Separation

    Separate your work space that you can enter and leave. Physical boundaries are the best, like a specific room you only use for work that has a door and a window. Set boundaries for you and family. Mentally clock in and clock out. Shower when you’d normally shower and dress like you would if you were in an office.

    The first issue people run into is that they feel like they are at work 24/7. If your boss IMs you after you “clock out” because they are on a different time zone, don’t answer. Make sure you do get to it first thing in the morning though. If you’re the boss, don’t expect your team to answer either. Set an emergency protocol for something that is truly urgent and use that sparingly.

  • Get out

    Go out to eat lunch or take your lunch out of the house. Fight loneliness by working a couple hours at a coffee shop. Find a nearby coworking space that let’s you work in open areas like WeWork or Real Office Centers. My cofounder and I have an office to meet face to face but we are only there 3 days a week to mix things up.

    When you’re at home, and if you’re like me and can’t work in complete silence, use white noise apps like Noisli or watch movies that you’ve already seen 10 times (do not watch a new movie or channels that play commercials).

  • Take Breaks

    My biggest regret is having sat at my desk for hours on end, for years, with my feet up on the desk sitting at an angle. My tailbone will never forgive me. I would just sit and work, nonstop. That’s not good for your body or your mind. With less distractions than we had in office life you need to remember to take breaks.

    Use a pomodoro type app like Tomato Timer to set periods of focus. Then take a small break and do a quick set of push-ups, air squats or burpees. Take your dog for a 5 minute walk. Get some sun!

  • Work in the cloud

    You’ll need to be in the cloud and paperless to make this work. I spent over 10 years helping CPA firms go paperless and many of them didn’t go willingly. If an industry known for doing things the way they’ve always done it can do it, so can you.


I love the freedom working remotely brings. I can literally work from anywhere in the world … assuming they have internet :) We have wonderful employees that’d we would never have met if we had to hire locally. We’re are able to offer our team the flexibility they need to raise a family or travel while not letting their accounting knowledge go to waste. It’s a win-win.

Remember to mix things up, be professional, and never sacrifice delivering a quality product.


My Contract Bookkeeper Didn’t Show Up Today. Help!


My Contract Bookkeeper Didn’t Show Up Today. Help!

Bookkeeper Seeking Permanent Part Time or Project Work

Full-charge bookkeeper and Office Manager with 25+ years of experience seeking project-based work or a part-time position. I am a QuickBooks (TM) ProAdvisor certified in QuickBooks Desktop and Online versions. Advanced A/P, A/R background. Ability to accurately process a high volume of vendor invoices.

- University of Phoenix - Bachelor’s of Science in Management (2003)
- Saddleback College - Associates of Arts in Interior Design (1998)
— Example applicant profile

When it comes to accounting, the typical small business narrative is this: The business owner has outgrown the ability for them to handle the books themselves and needs help. They launch their browser, go to a website like and post the job. The type of responses they see will be similar to the above (fictitious) applicant resume excerpt.

Business growth is great for business, but poses challenges. It’s great to see when business owners come to the realization that they need help. The problem lies with the default solution for most business owners when they try to hire an accountant.

Amazing, part-time accountants aren’t easy to find. You need to find someone who can work the small number of hours you need, be reliable, be a quick learner, and have the right level of education.

As your business continues to grow, the hours may need to increase. The complexity of the work may increase. These are all changes in your needs that may no longer fit the part-time accountant’s abilities.

On top of the business’s changing needs, it’s quite common for people looking for part-time work to have restrictive schedules that may impact their ability to step up when your business needs it or suddenly need full-time work and take a job giving you little or no notice. Is two-weeks’ notice ever enough time to find a solid replacement and get them up to speed?

Challenges our customers have faced using contract bookkeepers:

  • No Show – this is the most common pain point. The contractor just stopped showing up and never even called the owner to say they’re not coming in.
  • Can’t Keep Up – the limited number of hours make it challenging to stay caught up on the daily tasks and providing timely monthly financials. The business owner is flying blind as they have not seen a set of financials for many months.
  • Outgrowing – the business owner isn’t really getting any insight out of their numbers. They know accountants should be able to provide guidance and their bookkeeper isn’t able to. In order to continue growing, a higher level of capability is needed to start budgeting, ensure the financials are full-accrual, and measure the right performance metrics.

There are obviously exceptions to the norm. The question is: Do you want to have to spend the time and energy continually replacing part-time help? Will you be able to identify a qualified accountant that can help you grow?

The Basis 365 Difference

Basis 365 was created to offer a qualified, reliable and scalable solution to growing businesses so they can successfully navigate from $1 million - $20 million in revenue.

Many of our customers were thrilled to discover outsourced accounting even existed.  They have already been burned by a part-time bookkeeper leaving them high and dry or unable to help them grow and didn’t want to have to go through that again.

Here are some of the top reasons why our customers choose to us:


Our teams come with a formal education in accounting including previous work experience in corporate or public accounting. We instill a focus of constant improvement and consistency in our delivery with all employees. Our teams work with many customers exposing them to more experience than you’d get at one company alone. With access to our company’s entire pool of knowledge, we are able to provide a much different experience than hiring a single, part-time worker.   

Although many of our customers are small businesses, their accounting can get complex quite fast. We pride ourselves on our ability to handle all sorts of accrual accounting scenarios that your typical bookkeeper would not be able to identify, let alone develop effective procedures around.


This is what we do. We’ve established processes that work great for small but rapidly growing businesses and utilize the most streamlined, cloud-based solutions available. We are working away, day-by-day so your accounting information is always as up-to-date as possible. We pride ourselves on a quick response time and consistency in delivering your monthly financial statements. If someone is out on vacation, the other team member can step in to assist.


Working with Basis 365 provides your business with an accounting team. That’s a powerful advantage over bringing on a single part-timer. It’s easy for us to ramp a team up or down depending on customer needs, including adding on valued-added services such as budgeting or performance reporting.


Sales Tax Settings Tips from SimekScott

Sales Tax Settings Tips from SimekScott

Our preferred sales tax partner, SimekScott, posted this relevant piece about the risks of incorrect settings in Amazon Seller Central.

Many of our eCommerce customers utilize the Amazon Seller Central platform. Sales tax, at a high level can seem simple but it goes deeper and noncompliance can be expensive.

Check out some common errors they see when consulting businesses in this post on Taxify's blog.

We recommend consulting with a sales tax expert regardless of what you sell to ensure you do not trigger unexpected taxes. Internet-based sales tax law is changing as we speak as noted in this CNN article. Check in regularly to make sure your compliant.