You have started a business. The company is going along nicely but you need to sort out the “money” side of things. You have read that tracking your income and expenses is a good way of doing this. The words ‘accounting’ and ‘accounting system’ strike fear in your heart but you know you have to do this if your company is to get to the level you want it.
Which should you use?
There are a huge number of options here. They all claim to be the best package known to man! Only one is the best in reality. It is the package that you will use to get what you want.
TOP TIP: Here’s the thing, if it isn’t easy to use, then you won’t use it. The whole point is to use the system!
Having said that, here are some things to keep in mind as you select accounting software. These are aimed at the small to medium business which is owner-managed or has a staff complement of about 5 people.
Your level of financial skills?
There are a few packages that most business owners will know about. One is SAGE* and another is Quick books. These are well known due to their market saturation and advertising. Because many options you may find it to be confusing or overwhelming, especially because you have no experience with it.
I am not saying that you must use quickbooks* or sage but you should definitely use a software package that you feel comfortable using with your current level of financial and computer skills.
Based on this topic, a decision must be made. Do want an online system possibly with an app OR an offline system on a computer? If the app is needed, the accounting system choice will be cut down by this.
Online or offline?
Money, money, money
Many business owners first instinct when first starting out is to with the cheapest option. Better yet, free! Understandably, the price may be a factor if you aren’t bringing in an income yet. BCAS advises businesses to think long term here. It may cost a little bit now but there are 2 reasons why it will benefit you:
- Start with good processes and be able to grow on those systems and processes
- When you ‘grow out’ the initial system, it is costly to change. This is both in getting the system and having it installed.
Where is your business?
If you have just started, you will not know what you will need. If you have had business experience, you will know more or less what you need and want. The trick here is to start with the end result in mind. Here is an example:
At the end of the month (or any period), what are the figures /numbers/reports you would like to see? This may be a simple profit or loss or a profit margin percentage. Whatever it is, you need an accounting system that will produce this. Provided that you input the information accurately and completely, these reports will be available at any time. Make a list of all the features you absolutely need such as things like time tracking, invoicing, etc. Then, you can then decide on usability or price. Rule of thumb here is: It’s much better to pay a little more and get everything you need from the start than to deal with the hassle of trying to piece together different types of software. Think a little longer-term yo make sure you “grow” with the system.
Are you outsourcing or automating?
Outsourcing is when you do not do ALL the bookkeeping function in house. This adds to your requirements. Having said that, most online accounting systems have an option that your accountant can have access (can be limited) as well as you. This does decrease the costs because they can work remotely, rather than travelling to your office.
Automation is giving technology the responsibility for some of your work. Accounting systems are getting better and better at this while you are still in charge. Invoicing and emails are examples of this. You create the invoice and the system automatically sends it to the client or customer. Some systems can remind clients about payments too.
Final words
Hopefully, you now have a much clearer picture of the type of accounting software that is going to help you stay consistent with tracking your finances without all the headache and confusion.
Some more information on this topic is here.
* BCAS has knowledge of all main accounting systems and have not been paid to advertise or write about any particular software.