I have to confess I’ve been a happy, enthusiastic accounting software user for 20+ years now, but I know others don’t share my love of them. I picked this title and photograph because they completely represent my entrepreneur sister’s feelings about accounting(!)
So I want to break this down by how much tolerance you have for the topic — so there’s something here to help everyone.
Are you asking to be robbed?
Some of the saddest stories I’ve ever heard from small business owners feature a bookkeeper or accountant (employee or outside contractor) who pocketed a lot of their cash — tens of thousands. And I’ve heard this story OFTEN!
No matter what decisions you make on accounting — whether you farm it out or hire employees to do it — make absolutely sure the bank statements, credit card statements, PayPal statements — ALL statements come to you directly. At home. You can have a copy go to your bookkeeper — but the originals must go to you at your home. If your bookkeeper can hand you a copy of the statements, the bookkeeper can change them without you knowing.
If you hate the idea of accounting — and want someone else to do it
This is your most expensive option. If you are willing to spend this money, fine. Just make absolutely sure to protect yourself from theft by reading the section right above this. Don’t assume it can’t happen to you.
I’ve seen it happen to both airheads and very smart business people who were just too trusting. And if your statements aren’t going to you first, at home, YOU are too trusting.
If you hate it — but are willing to enter checks & balance statements
Get a basic Quickbooks package and pay a bookkeeper or accountant to set it up for you. You should be able to get it set up for a couple hundred dollars. Maybe even less if you hire the bookkeeper to do quarterly or annual tax statements. Or you can pay QuickBooks $50 (a 1-time fee) to set it up for you.
They’ll set up the chart of accounts, so when you enter items into the program the amounts will go into the appropriate tax categories for your business.
You write checks. You deposit receipts. The software will automatically (after the first time) assign it to the tax categories your bookkeeper set up for you. Thus if you have car payments, they automatically go into “auto.” When you buy postage, it automatically goes into “postage.” When you get a check from Amazon for ebook sales in January, the deposit automatically goes into “Sales – ebooks.”
If you are willing — but nervous — to do it yourself
Some accounting software — ANY accounting software — is better than trying to manage your revenues and expenses by hand.
Yes, you could list your expenses on a spreadsheet to start. And your revenues. But that is, truly, much more work than using basic accounting software.
Any competent accounting software for beginners will work just like a checkbook. You have to write checks. You have to deposit receipts. When you do that, you might as well do it in software that will automatically (after the first time) assign it to the tax category it belongs in.
When it’s time to do your taxes, you just click on “reports” and “P&L” and you can easily see everything — in the categories YOU set up. Need to know in December if you should buy something then or wait until the next year (January)? Again, just a couple of clicks will tell you.
If you’re willing to trade a little money for convenience, Quicken Home & Business ($90/year) or QuickBooks Self Employed ($180/year) are the best. They are very, very easy, and when your business is doing better — it’s easy to upgrade it to more advanced Quickbooks options.
Free accounting software
The following two websites each had a list of the best free accounting software. According to FitSmallBusiness.com, these are the winners (use their link to get links & info on each):
- Wave
- ZipBooks
- SlickPie
- xTuple PostBooks
- Gnucash
- Akaunting
According to TechRadar.com, these are the best (again, use their link here to get links & info on each of these):
- ZipBooks
- Money Manager Ex
- GnuCash
- TurboCASH
- Wave
- …and several more
How do you know if you need more than free software? If you want to integrate payroll, you’ll need a paid program. Also, the free programs don’t track your unpaid bills for you. Also, don’t expect tech support and as easy an interface for free programs.
For those comfortable with VERY BASIC accounting
Quickbooks is the recognized leader of the field — for a good reason. I’ve found it extremely easy to use. You enter checks and electronic funds transfers like you were putting them in a checkbook. You can easily balance your bank and your credit card balances. And it lets you track Assets and Liabilities.
The price used to be reasonable but, in my opinion, it no longer is. I used to pay $60-80 every 5 years or so, changing only when my version no longer worked with the current Mac operating system. Today, they’re transitioning to a monthly fee like MS Office — and the prices have doubled, tripled, and even quadrupled. Of course, compared to the cost of having someone else do it for you — the prices look reasonable.
Quickbooks’ website makes their prices look better — but that’s because they show a 50% off deal. If you look at the small print — that 50% off only lasts for three months. After that, you’re up to the following prices (as of January 2020):
- Their cheapest version, QuickBooks – Self Employed, is $15/month for $180/year. It’s meant for Schedule C businesses, but it should also work for LLCs. This should be fine for any new business — unless: 1) you bid on jobs, or 2) you hire a lot of sub-contractors, or 3) you have a lot of payables to schedule.
- Next up is Simple Start at $25/month. This version adds producing estimates and managing 1099 contractors.
- Next is Essentials at $40/month. This version adds managing Accounts Payable and lets you have 3 users.
- Then there’s Plus at $70/month. It adds in inventory tracking and lets you have 5 users.
None of the above versions include payroll. The cheapest version of that — which you can add to any of the above — is $22.50/month plus $4/month per employee.
A warning: Buyers have been desperate to buy QuickBooks on CDs — for one-time fees — while they still can. I grabbed one last year for myself and it’s been good. But if you look at buyer reviews, it appears QuickBooks is no longer servicing these products well — or at all. Particularly I’ve read terrible reviews of their $1,000+ CD versions which include multiple users, payroll, and the works. Trying to “save” by getting their final CD version may end up more costly than you want to pay.