In this blog we are going to look at what you need to know before you select an accounting software program to use in your business. We will then look at specific software programs on the market including MYOB, Xero, Reckon, Saasu and Cashflow Manager.
Your choice of accounting software is a very important decision and we actually describe it as one of the foundation stones in your business. Together with the right business structure and insurances they are the foundations of a solid business. So before you select an accounting software program you need to answer three critical questions.
Firstly …. What are your business needs?
Do you just need basic bookkeeping software that lets you record your receipts and payments and produce a GST report that mirrors your Business Activity Statement? Do you also want the software to prepare your Tax Invoices, track your outstanding debtors and produce monthly customer statements?
Most of the entry level programs include these features but if you also want to track your creditors and suppliers you need to move up to the next level. If you need inventory management your options change yet again and if you need a point of sale scanning solution then your options narrow. If you are a builder or property developer you might also want job costing functions.
Of course, if you have employees we encourage you to add the payroll module and if you want to produce your own financial statements with a full blown general ledger then your software options change again.
Next, do you want to use a cloud based subscription service where the software is hosted on the internet or do you want to use a traditional software package that you buy outright and load on your desktop computer or laptop?
With Cloud based programs you pay an ongoing monthly subscription fee and the key benefit is you have access to your data anywhere, anytime via the internet. This means you can share your file in real time with your accountant and it eliminates the need for back-ups and emailing data files. Cloud based packages use bank feeds to minimise data entry and processing time plus you also have access to the latest version of the software at all times.
It all sounds wonderful but not every cloud has a silver lining. You no longer own the software and some people have concerns about data security in the cloud. Personally, we believe cloud accounting is the future and the pros far outweigh the cons.
The final question in the software selection process is what level of accounting skill do you have? There’s no point having an accounting program if you don’t know how to use it. Some double entry programs with all the bells and whistles are complex and without the skills or training you’ll simply produce what we call a ‘computerised shoebox’. Sadly, the mismatch of skills and accounting software has reached epidemic proportions in this country.
One you have answered all those questions it’s time to choose your accounting software. To help you decide what accounting software is right for your business, we will examine some of the most popular accounting software programs on the market in Australia starting with the simplest, Cashflow Manager.
This is a single entry program that requires no knowledge of debits, credits or double entry accounting concepts. It has a spreadsheet or column layout so it looks like a manual cashbook on the screen and the basic version also lets you generate tax invoices and produce customer statements. There is also an add-on module for payroll that includes suppliers and creditors. The basic version comes in both a cloud and traditional desktop format.
From there we take a step up in functionality and complexity. Software vendors like MYOB and Reckon (which was formerly known as QuickBooks in this country) both have a range of programs including cloud based packages. They are both double entry accounting programs that have cloud based and desktop versions. Their functionality is very broad and the monthly subscription fee depends on what features you require. They have add on modules for payroll and point of sale solutions for retailers.
Next let’s look at programs that are exclusively cloud based like Xero, Quickbooks and Saasu. Both have a multitude of add-on features like job costing, inventory and point of sale and the monthly subscription fee is based on the level of functionality you require. The beauty of these programs is as your business grows you can add the features you require but being double entry accounting programs you will need some accounting knowledge or training to use these programs. Being cloud based, your accountant can have access to your data in real time and you always have access to the latest version of the software.
In summary, before you make your software selection you need to identify your business needs and then decide if you want a cloud based subscription service or a traditional software solution that you own and load on your computer. Finally, and probably most importantly, you need to then factor in your level of accounting skill. The final step is to then choose what accounting software best suits your business.
Your choice of accounting software is a very important decision and there are a multitude of other programs to consider like BankLink and Freshbooks just to name a few. Price is another issue but the wrong choice can prove a financial disaster. Feel free to talk to us today about your options as our mission is to help you minimise the time and cost associated with bookkeeping and BAS preparation.