Accounting vs. Budgeting

From my podcast Audacious Entrepreneur on the Move episode #010.  Listen now >>>

Let’s talk about the fun topic of money. I know y’all love this.

This is a really important topic, especially if you’re an entrepreneur.  Of course, a big part of our job is making money and making systems that work so that we can turn a profit and do what we love for the rest of our lives (or for however long we want to be doing them).  We want to lead a self determined life.

I see a lot of entrepreneurs who say that they budget and that they know what’s going on in their company, but what they’re actually doing is accounting.  If you are categorizing transactions from your company after-the-fact, you’re accounting.

Budgeting is forward thinking.  It is setting aside funds in order to purchase or create transactions for the future.  Accounting is what you have done in the past.  So if you are using software like QuickBooks or Wave, or even Mint, you’re accounting, and that is great.  You have to do accounting in your business, and I am not here to diminish the value of accounting.  It’s why we hire accountants.

So then, how do we budget?  What’s more, how do you start getting into the mindset of budgeting? 

Well, first of all, this is something that just is not taught to us.  I think we all can agree that the American education system largely overlooks the fact that we need to manage money in our lives.

This is amplified when you start a business.  Budgeting is even more critical when in business, and yet so many of us just never learned to do it.  It took me years of being in business, years of entrepreneurship, to realize the difference between accounting and budgeting.  And now that I do budget, my life and work is completely changed.

Okay, so then how do we budget well?

The system that has been around the longest is the envelope system.  But most of you will cringe because the envelope system exists completely in cash.  Another alternative is to budget manually by looking at your bank account and then allocate funds that way.  But if you’re anything like me, you’ve got a lot of shit going on.  So that’s going to be a pain in the ass.

There is an app I use, instead.  Now, let me be clear, I am completely unaffiliated with this software.  I use it, myself, and I love it.  I suggest it to friends and clients but I receive nothing in return.  In fact, they don’t even have an affiliate program at this time.  So this suggestion is purely because I have found that this has worked for me and for my clients, and I believe it will work for you.

It’s called YNAB, or You Need A Budget.  YNAB is an incredible app that is based on the original envelope system; setting aside certain amounts of cash into different categories for different different purchases in the future.  So what YNAB does is it forces you to categorize all of the money that you have right now.  Period.

As a reminder, accounting is categorizing past purchases.  Budgeting is categorizing the money you currently have for the future.  This means that one can spend confidently without the anxiety of wondering how a single purchase will affect the rest of the business.

Separation of Personal and Business

Now, if you have done your due diligence, setting up a budget (whether through YNAB or any other system) should be very straightforward because your business bank account should be separate from your personal.  If they aren’t separate bank accounts, then you need to contact me and we need to discuss how to make sure that you business is secure and set up properly.  This goes along with the concept of ‘piercing the veil’ — all liability needs to be owned by the business so that your personal assets are not at risk.

If you’re a younger entrepreneur, younger as in newer, it is likely that nobody has ever told you the difference between accounting and budgeting and you may not be doing it.  If you feel like you’re constantly on a hamster wheel, you’re constantly racing to try to make ends meet, or if you run your business card and you’re not sure how that’s going to affect your company’s profit margin, you’re probably not budgeting.  And it’s time.

Cheap or Free Apps

This is an ongoing repository.  If you have any suggestions for subjects or resources, leave a comment below and I’ll add it!

When starting a new business or venture, your budget is really tight.  The most important thing to know is that you should not feel bad for penny pinching.  I personally feel there is too much pressure to spend in our society, and sometimes it can feel weird to not get the latest and greatest.

I’ve worked hard at discovering hacks so I retain the freedom to grow my business in the right way.  Businesses, like children, take a lot of love and attention – and money.

Below are the hacks that I’ve used, either in the past or currently.  I hope they make growing your business easier!

Surveys & Forms


Typeform // Free

Typeform is my absolute favorite form and survey builder.  It’s super easy to use, with a drag and drop form builder, and it has a friendly interface for even the most tech illiterate user.  There are some paid options, but 80% of your needs will likely be met with the free app (I haven’t paid for it, yet).


Google Forms // Free

If you already love Google, then you’ll love Google Forms.  It’s also very easy to use, easy to share, and comes with a lot of options.  The nice thing is that all your forms will exist in your Google Drive, as will the answers you receive.

Storage Solutions


DropBox // Free (up to 3GB)

I love DropBox.  I love that it syncs to all devices, it looks like my other file structures, and I don’t have to worry that it’ll be there.  I also love that it’s free!  If you need to take work with you, or show something off to a client, this is an easy solution.



Google Drive // Free (up to 15GB)

Google Drive is also free – yay!  It also provides more storage for its entry level and typically sync’s well across devices.  I sometimes feel its storage structure is clunky, but it could just be me.


Evernote // Free

Evernote offers storage and documentation options.  It’s a little more complicated than the others because it was developed to ‘save’ rather than ‘store’, so explore it well before you choose to use it in this manner.  The upside is that it is fantastic for note taking and keeping track of tasks, inspiration, and system development.



Wave // Free ($15/mo for payroll)

Wave Apps is a great little accounting program.  It’s cloud based, and they have several iOS and Android apps that allow you to manage some (but not all) of your affairs.  It’s structured like Mint, and can send invoices and receive credit card payments.  However, I’ve noticed I have to really stay on top of it for my CPA to find it useful.  I don’t have a lot of time, so I use it mostly for invoicing.


Your Bank // Free

This sounds really obvious, right?  Since Wave got to be a mess for me, I ended up pushing everything in and out of one bank account, then exporting a spreadsheet on a quarterly basis.  I annotate it manually for my CPA, and he is able to use it to run taxes (yay!).  If you’re running a physical business or selling products, you will need balance sheets and profit / loss margins, so Wave will be a better bet.


The Ol’ Spreadsheet // Free

I’m not numbers minded, so this sounds insane to me.  But if you’re a sole proprietor, you can probably get away with keeping track of things via a spreadsheet.  There are a lot of examples on Google, so I would search for examples before setting yours up.  Oh, and make sure your CPA is ok with this before you make him/her go insane.



Google Fi // $20/mo unlimited talk and text – $10/mo for each GB of Data

This is my current love affair.  I actually sold my iPhone to do this (gasp).  I was really sick of paying $60-90 a month for cell service.  Google Fi utilizes TMobile and Sprint towers (as of now) so you have better coverage.  They also include international data in your plan so you don’t have to buy ‘special’ data.  Calls are made on wifi when possible, and there is no term limit.  It’s just fantastic!


Google Voice // Free

Before there was Google Fi, there was Google Voice.  This is akin to an ‘internet phone’ and works through your Gmail account.  You can make calls and text from your computer, have calls forward to a physical phone, and use their app to text.  It’s not a perfect solution, but if you want a separate number for work this definitely is a great first step.



GSuite // $5/mo./user

GSuite (formerly Google Apps) for business used to be free.  Now it’s not.  Sadface.  But, it’s still extremely affordable.  Why would you use this over a Gmail account?  One reason is the power of managing a team’s set of emails from an easy to use platform.  Beyond that, you can manage your domain through Google Apps.


Zoho Mail // Free(ish)

Zoho is a knockoff of Google Apps.  Its email function is free, but some of its other modules are not.  It’s nice to be able to utilize different programs from one place, so it may be worth the extra cost to use them.



Zoho CRM // Starts at $15/mo./user

As I alluded to above, you may prefer to use multiple programs curated by one company.  Zoho’s CRM integrates into their email, so you can have everything organized.  And we love organization.


Streak for Gmail // Free(ish)

I use Streak.  It’s a very simple, very configurable CRM that integrates into Gmail.  You can set up pipelines for different organizations, and boxes in those pipelines for different clients.  I have four pipelines, all color coded and organized differently (I meant it when I said ‘serial’ entrepreneur).  There are some things Streak tries to upsell you for, but if you don’t have a large team, they’re not needed.

Share what’s worked for you!