As business owners, we try to control costs as much as possible. As an accountant, I’m all for controlling costs. However, there is a fine line between running your business lean versus cheap. In the long run, cheap can cost you more. This is true when selecting software tools to support back office operations. I see many businesses fall into the trap of limiting themselves to only using free software to run their business. Don’t get me wrong. Free software can be a great place to start and solve an immediate problem. However, when your business starts to grow that free software usually can’t grow with you. And when that happens, daily operations can be impacted in sudden and painful ways.
When it comes to accounting software, there are a couple products out there I don’t recommend. And it’s not because they are free, and I want you to spend a lot of money on software I like. It’s because I believe they are inferior products and, in the long run, will cause more problems than they solve as has been my experience with Wave Accounting. When the software first came out, I joined their accountant network. And then I started seeing problems with the software that had a negative impact on the accuracy of the numbers. When Wave chose not to correct the issues, I requested to be removed from their accountant network. At best, Wave does only the most basic of bookkeeping akin to keeping a spreadsheet; at worst, the accruacy of your financial information is in question. And forget about exporting any data from Wave. It’s difficult at best which means changing to another accounting software is time consuming and expensive. GoDaddy Accounting (formerly Outright) is another software I don’t recommend.
So what accounting software do I recommend? My first choice is Xero. It is fully functional accounting software with several subscription levels to grow your business. The clean interface makes navigation and understanding your numbers much easier. Also, the dozens of add-ons allow you to customize the software to streamline and automate the back office operation of your business. Your valuable time should be spent on your clients and growing your business, not on the back office operations.
My second choice of accounting software is Quickbooks Online. While Intuit has been dumping significant money into developing the online software, it can be buggy. The interface is very cluttered causing frustration for business owners who just want to create an invoice or write a check. Quickbooks Online is also known to go down at inconvenient times. Xero has a much better record for uptime. The subscription levels are different from Xero. Quickbooks Online subscriptions are priced based on functionality. That means the basic subscription does not allow you to customize reports, create 1099s, or even create a budget among other things. In a nutshell, the Quickbooks Online subscription model is all about the upsell. Personally, I find that annoying. The Xero subscription model relates to transaction volume and grows with your business accordingly.
Notice that Quickbooks for Windows does not rank among my top accounting software choices. Gaining access to the company file makes it difficult to collaborate with clients. There are cloud hosting options, but they are not cost effective. The risk of data loss with the Quickbooks desktop editions is high. Few businesses have reliable data backup and recovery plans in place. If your file should become corrupt (and it eventually will in my experience), data loss could severely impact your business.
Are you using the right accounting software for your business? Is it time to make a change? Please get in touch.