I’m often approached by business owners just starting out asking what software they should use to track their finances. There are so many options nowadays, that it is hard to choose. There is also the old standby of excel, which is where most businesses start.
My first piece of advice is to think about what your business is, and where you want it to go. If you are starting a home based business, and it is just you, you aren’t sure if anything will come of it, or how far you want to take it, then excel should work for you. But if you are trying to start a viable business, not a hobby, and have every intention of having it grow, hire employees, have some volume of invoicing or expenses, then treat your business as just that – a business – and invest in some accounting software. Although there is some initial pain, in the long run, it is the best choice for your business. Now choosing the software. 5 or 10 years ago, you really only had two options – QuickBooks and Simply Accounting. Both were relatively the same price and the functionality was similar. You will have people tell you that one is superior over the other but depending on your background one or the other would serve your needs well.
Fast forward to present day and there are so many options available – desktop and cloud options – QuickBooks, QuickBooks Online, Sage 50, Sage One, Wave, Xero, Kashoo, Freshbooks…..I’m sure I’ve missed some, but those are really the big players.
So which one is right for you.
The first thing that you have to decide is how big your business is going to get. What you want to make sure you don’t do, is start with a product that you are going to use now, but will outgrow in two years. Changing accounting systems is not straightforward, and many people end up with one software or another only because that is what they’ve started with.. If you are planning to take your business to a large scale, have or will have complex inventory requirements, then QuickBooks or Sage 50 are your best options, as they are scalable, and have products designed to grow with your business. I’m a big fan of QuickBooks and so my bias will always lean in that direction. I find it much more user friendly, and much more customizable and adaptable than Sage One. But ultimately, the choice is yours.
The other thing that you should think about is proprietary software. Many industries, such as the legal industry has industry specific software. PCLaw is the perfect example, but this also applies to such industries as medical and dental offices, mechanic and garage shops, retail stores….you get the picture….pretty much every industry has some version of industry specific software. I’ll walk through PC Law as an example, but this would apply across any of the other fields as well. The perceived advantage of going with a program like PC Law is that it can run your whole office. It manages the front end of your business, as well as the back end office and bookkeeping tasks. That being said, whenever you see the demos, and the list of features, they always focus on the things for the front end of your office, which you can relate to and understand, because that is what you do. The downfall, is that the accounting side of these programs rarely are anything more than bare bones. The other downside is in trying to find a bookkeeper who knows this software and does a good job. The pool of people you have to choose from is much smaller for something like PC Law, than it is for a program like QuickBooks. The primary purpose of QuickBooks, or any of the other accounting software is to accurately record your finances, but also provide you with meaningful and important reports. They will provide you the bells and whistles for your finances, that PCLaw does for the front end of your law practice.
So which is going to be best for you? I’m biased and believe that solid, accurate financial information is fundamental to the success of any business, only you can decide how much importance you will put on those financials and what value you assign to them. Is it important to be able to track your clients and their respective dockets accurately? Absolutely, but it also is fundamental that your system is tracking whether you have invoiced them, when they have paid you, and how much money you have in the bank.
Before making any decision on software for the front end or the accounting software for your business, download a 15 or 30 day trial and take it for a spin. See exactly what it can do as well as what it’s limitations are.
The better informed your choice is as the beginning, the less complex your bookkeeping function will be in the future of your business.
I’d love to hear your comments and thoughts. Or if you have found something that I’ve not mentioned that serves you well, I’d love to hear about it.