Is your Accounting Software just feeling like MORE work?
Do your accounting tools provide the insights you need?
For many business owners, the bookkeeping and accounting side of things is a necessary evil. I mean, it’s great when you can send out a bunch of invoices and log a bunch of payments because that feels really concrete and means you can keep things going for another day/week/year. Huzzah! Yet, the process of keeping things up to date in your accounting software can seem really daunting.
While you know, intuitively, that the numbers in your business should be able to give you some valuable information, it isn’t always obvious how to generate that data. The process of understanding your books, your cash flow, maybe even be able to run a few projections would be super valuable…but how do you accomplish it all?
In many cases, unless you have an amazing bookkeeper or accountant, or an advanced business degree, you’re likely relying on your accounting software and/or a few spreadsheets to accomplish this. But how do you know you have the right accounting program for the job and are you using it to its full potential? There is a large variety of programs out there, many of them in the cloud and super convenient, things have come a long way.
Some options for Accounting Software:
If you’re just starting out, have a fairly simple business model, or don’t want to be overwhelmed with data right now there are few more simple options out there. These might sync with your bank data, allow you to create invoices, accept payments, and add expenses. This will generally mean you can generate a Profit & Loss Statement and a Trial Balance, which is often what you need to file taxes. These also will allow you to track unpaid invoices, and generate an Aging Report so you can follow up with those who still owe you money. Some examples might include Freshbooks, WaveApps, or even Mint.com have some great features that help you keep track of many of the daily functions you’ll need.
For more robust and traditional accounting software, you’ll likely hear about Quickbooks Online or Xero. Quickbooks has been a small business standard in the US for quite some time and is likely familiar to most accountants which is a plus. Some other contenders are Netsuite and Sage which add some automation functionality to their feature list. There are lots of options available and provided the software you choose generates the data your accountant needs, you’re all set.
So what features do you need?
Here are a few questions to ask yourself to help determine which software options may be the right fit for your business.
First, a few things you should always look for:
1. Create single and recurring invoices and be able to apply payments and credits.
2. Track your expenses and be able to categorize them for your P&L and Trial Balance.
3. Sync your bank account to more easily track your transactions, but make sure you have the ability to approve/match transactions (or you can easily end up with lots of double entry)!
4. Basic reporting like P&L, Trial Balance, Aging, Customer statements, Accounts payable reports, etc.
5. Sales Tax reporting and functionality
Some more advanced features:
1. Bank reconciliations – if you have a lot of transactions/payments, this is a must to ensure you are capturing all activity that hits your bank account.
2. Advanced Reporting – Previous year/period comparisons, custom reports, and more.
3. Visualization of Data – cash flow, income and expense data can be so helpful to see in charts and graphs.
4. Audit logs – if you have more than one person handling your data this can be immensely helpful so you can track down changes and potential errors. Also useful if you’re solo but can’t remember when/why you made a change.
5. Journal entries – a way to use double entry accounting to make adjustments to your books that are otherwise exceedingly complicated.
6. Deposit reports – so useful if you deposit checks / credit cards in batches and need to go back to adjust or track something down.
7. Inventory tracking – this is usually an advanced feature and not available in more simple accounting software.
8. Payroll – this can sometimes be found in simpler software but worth double checking the features.
Make sure your accounting system can help your business grow.
If you start off with a more simple option,make sure you’re taking stock of where you want to be in the future. It’s not overly complicated to switch systems as you go, but if your business is growing, it may feel like more trouble than its worth. However, if your accounting system isn’t providing functionality and requires a huge amount of manual entry, double checking, and a huge shuffle every few months to do your taxes at year-end…then it may not be doing its job very well at all.
Put some thought into the functionality you’ll want and need in a few months or years time and see if having those features now is really that much more expensive than the lesser option. If you’re talking a few extra dollars a month to get everything you may need? It might be worth it to start with those functions up front and give your self room to grow.
Also, it’s easy to get overwhelmed by technology, especially when it is in an area of business that is not your strength. If you’re finding yourself easily frustrated and having trouble making things work, see if you can find someone to help evaluate your business and the software you are using to help problem solve. Perhaps the software isn’t the right fit or perhaps you aren’t aware of some functionality that you could use to make things more efficient.
The goal should always be to make your business run smoothy and not draw your attention away from the things you enjoy and what bring in your revenue. If you’re feeling overwhelmed and need some clarity, it is worth taking the time to learn more before getting too frustrated. Keeping your books up to date and easy to manage can make a huge difference in your mental state and the financial success of your business.
Looking for some clarity with your books?
If you’re still struggling to make sense of all this, let’s talk. Hopefully a little insight and strategies will help get you on the right track and let you get back to building the business you love.
