YNAB BLOG

One Year of Using YNAB for YNAB (the Business)

It’s been about a year since I moved YNAB to YNAB, and I wanted to report how it’s been going.

In a word, awesome.

Speed

Monthly bookkeeping used to be the absolute bain of my existence (and I’m a trained accountant, so it’s not that the stuff is technically hard for me).  I hated it.

Now, I hate it less, because I’m done a lot faster.  What took me about 4 1/2 hours each month in 2011, took me about 2 1/2 hours in 2012.

So the speed is obviously a big win.

Tax Planning (and Preparing)

What about taxes? Well, here’s a little test to see if your accountant actually cares about your numbers, and is a tax planner instead of a tax preparer.  The two are so very, very different.  The test?  If they demand that the format you give them is importable into Quickbooks.  Yes, it saves them time, because then they can export that Quickbooks format into their tax preparation software, give it a once-over, and finish preparing your return.

I went to the Reports section of YNAB, and did an export of Last Year of the Income v. Expense report.  I gave the spreadsheet to Casey (a guy I will recommend again, and again, and again to every YNABer that needs a live person to help with their tax strategies. Here’s his book, and here’s a podcast I recorded with him recently) and did he come back and demand it be in a Quickbooks format?

Nope. He combed through the data, had questions for me, and then went on his way.

I’m generalizing here (and getting off-topic), because I’m sure there are many tax professionals that just like the time savings of having it be QB-importable, but also really do look at your numbers and try and save you money.  But if you get the feeling you’re just one of a thousand returns done by your accountant, and that he is, perhaps, running a tax prep mill more than a tax planning practice…you should probably shop around a bit more.

Anyway, doing a quick export and handing my tax data off to Casey was super easy.

So, speed has improved, and tax preparation is still a piece of cake.  That all pales in comparison to the greatest benefit of using YNAB for YNAB: The Budget.

The Budget

I’ve always been so extremely conservative with the business money, I’ve never really had to budget (your alarm should go off right there).

The business has always been profitable, except for a dark time in 2009 when we were sprinting to the finish line of YNAB 3 and I was draining every last dollar I personally had.  But besides that period that I will never repeat? It’s been profitable. (I should say, that had I been budgeting in 2008 and 2009, I likely would never have experienced the dark period that was YNAB 3 Development).

So, I never budgeted for the business until 2012.

And then I started budgeting every single dollar (duh), and saving for rainy days (double-duh) and… it’s been awesome.

A few wins, all directly related to the fact that I’m now budgeting for the business:

  • We spend less frivolously.
  • We save for big projects (like the iPad, and Other Big Things).
  • We set aside money for fun things, like our meetup this year, where we’ll be doing some wilderness survival training.
  • We set aside money for Christmas and birthday presents.
  • We set aside money for our Buffer, just in case the revenue stops flowing for some reason (My target is a three-month buffer for the business).
  • We can be more aggressive with our hiring.

That last bullet has made all the difference. I see new hires as debt, more or less.  I promise I’ll pay them indefinitely, and they promise to totally change their life, and spend (potentially and hopefully) years pouring their heart and soul into YNAB.  This is debt in my mind, and I take it very seriously.

So serious, in fact, that I was pretty afraid to hire people.  The budget has fixed that. I now see a Category in the Budget that says [redacted] and I get excited about it! I see the funds are there to hire someone, and everything’s giving me the green light.

It’s help me be more aggressive.

And for some of you swashbuckling entrepreneurs that roll in a totally different way, it may tell you to slow down a bit :)

Either way, running the business with YNAB has been one of the single best business moves I’ve made.  If your business is YNABable (you don’t have inventory, or significant AR/AP tracking needs, and you don’t need significant reporting on capital), you ought to give it a serious go. You can read how I moved to YNAB to get a step-by-step.

17 Responses to “One Year of Using YNAB for YNAB (the Business)”

  1. Sarah

    To be honest, it never occurred to me to put my business on YNAB. I run a small bookkeeping business, and just use QB’s by default, for my business and my clients. I would love to use YNAB to budget the business! I do have A/R so I may run both for a bit, but that shouldn’t be a big deal as we are small. I can see using QB’s just for A/R and YNAB for everything else in the future. Thanks for the idea!

    Reply
  2. Mike

    I think it’s great that you eat your own dog food both personally and business-wise. Really makes you keenly aware of every little bug and polish item you want to fix. Your current developers have made YNAB 4 a joy to use and it’s just brilliant. Love it. Keep on rockin it.

    Reply
  3. Kay

    Hi, I have been enjoying reading posts on your site.

    Being a pedant I think you meant bane,
    Noun

    bane (plural banes)
    1.A cause of misery or death; an affliction or curse The bane of my existence

    rather than bain,
    From Middle English bain, bayne, bayn, beyn (“direct, prompt”), from Old Norse beinn (“straight, right, favourable, advantageous, convenient, friendly, fair, keen”), from Proto-Germanic *bainaz (“straight”), from Proto-Indo-European *bhei- (“to hit, beat”). Cognate with Scots bein, bien (“in good condition, pleasant, well-to-do, cosy, well-stocked, pleasant, keen”), Icelandic beinn (“straight, direct, hospitable”), Norwegian bein (“straight, direct, easy to deal with”). See also bein.

    I am also curious as to why the category for hiring has been redacted, and what AR/AP is.

    At the moment I am working on a filing system to start to have some numbers. As a casual things fluctuate.

    Cheers

    Reply
  4. Casey Winans

    Thanks, Jessie, for writing this follow-up post. I’m very glad to see this approach was well received by your tax planner! I am recommending YNAB to my small business friends so they can break free of QB and its feature bloat where applicable.

    Reply
  5. tystacyk

    I’m excited to read this update. After gathering all the information for this year’s taxes I realize that I need a better system. I would love to use YNAB for home and business.

    I don’t have any inventory at this point, but I hope to one day. Any plans to make an inventory-friendly version of YNAB for businesses in the future? I don’t want to use Quicken!

    Reply
    • jesse

      There are ways you could do it now with split transactions and an off budget account to kind of mimic double entry accounting…but I think you’d be better served just to track inventory separately and then track cash flow with YNAB.

      Reply
  6. Catherine

    I was wondering what people use to invoice for their small business?

    Reply
  7. JohnF

    Jesse, any chance you could post the budget categories you use for your business on a blog post? It would be great for those of us starting up small businesses. The default business categories seem too few.

    Reply
  8. antoniofotoru

    It is a great app… And i want to move my small company on it. But i can’t find a way to use it in this way. I used YNAB for personal and have cloud sync Mac and 2 iPhones.
    How can i create one more budget and have cloud sync with my coworkers, and my family does not see business budget on their devices?

    Reply
  9. Mike Keys

    Can a person run business and personal finance together in YNAB, such as with Quicken Home and Business or would I need to run them separately? This was one of the reasons I switched from a Quicken – QuickBooks combo method to Quicken Home and Business where it’s all in one. I’m a sole-proprietor business, as opposed to an LLC or an incorporated business so combining them seemed to make sense that way too.

    I really want to switch from Intuit. I have wanted to for years but just have been reluctant due to the history and the learning curve. I finally gave up on TurboTax last year. The import from Quicken to TurboTax basically doesn’t work that well anyway and everything needs double-checked so printing the correct report and then entering into another tax software is just as easy and way less expensive.

    Sorry for combining subjects here!

    Reply
    • mark

      Hi Mike –

      You’d run one YNAB file for your business and one for your personal finances. Toggling between them would be as simple as File > Open.

      Reply
  10. Dave M

    Hey Jesse! It’s been a long time, hope you are doing well! I’ve finally come back to YNAB after a couple years of trying to use Mint, and then Quicken. Unfortunately, I totally lost control of my finances during that time. Been using YNAB again for about 1 month, and already I feel 100% better! Go ahead…. You can say “I told ya’ so,” I deserve it. :P

    Anyway, I just read both articles you wrote about moving YNAB to YNAB. This is great stuff, and I’m currently trying to see if YNAB will work for tracking our short term/vacation rental log cabin. It’s pretty straight forward — rent comes in, expenses go out. No inventory, no invoicing, no payroll. However, we do have a mortgage on the cabin, and of course we can only write off the interest expense. Do you have any suggestions on how to track that in YNAB? I have the mortgage setup as an off-budget account, but when I enter the transfer from checking to off-budget mortgage, and categorize to my “mortgage payment” category, it doesn’t really help with the tax reporting. And I really don’t want to reduce the balance of the mortgage account by the full payment (transfer) amount, since only a small portion is going to principal.

    I’m struggling to figure out how I might track this better. I do have an amortization table from the bank, so I know exactly how much of each monthly payment is interest.

    Thank You, and it’s GREAT to be back! :)

    -Dave M

    Reply

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