Taking a look at what different accounting systems can automate
The market for accounting software is growing. There is a lot of demand and offer, so committing to any software is going to require research and analysis of the things you need from such a system.
Let’s take a look at five different options:
- QuickBooks Online
- QuickBooks Desktop
Wave is famous for being the accounting system a lot of new, small, primarily service-based businesses are opting for. The reason behind this is that you can do quite a lot of accounting for free.
With Wave, you pay for financial services (2.9% + 30¢ fee to process credit cards, and 1% for processing bank payments where available). If you process your payments somewhere else, this might be a good option, since accounting and receipt scanning is free. If you need to run a payroll or your business is inventory based, consider comparing this software with other options: Wave payroll costs $20 to $35 per month plus $4 per employee per month. It does not track inventory or allow you to create Purchase Orders.
Freshbooks is a popular solution, chosen mostly by service-based companies. Similar to Wave, it does not provide inventory management nor purchase ordering.
It has a customizable invoicing routine, which isn’t surprising — FreshBooks has been built by someone who went to accounting school. He was disappointed when he realized that other services did not fit everyone’s invoicing needs. Adding your logo, choosing a font or color will be easy. Turning proposals and estimates into invoices can be done in a snap of a finger. You can also track whether the invoice has been seen, which, we think, is a great feature.
Its mobile app allows you to scan receipts, record expenses, work with invoices and payments. Their third party partner Yodlee provides a banking feed connection, allowing you to automatically export your bank and PayPal expenses, saying goodbye to manual work. The reconciliation service, available to higher tier users, is not completely intuitive, which you might consider if you don’t have an accountant working with you and want to see if you can succeed in managing your books by yourself.
FreshBooks plans start from $15 a month. FreshBooks Lite comes in with 5 billable clients, unlimited and customized invoices and unlimited expense entries among other features. Its highest (besides custom plans) tier Premium allows you to have up to 500 billable clients plus all the features of the lower tier plans. Premium subscription costs $50 a month.
Some of the best things about Xero are its user-friendly UI and the ability to add an unlimited number of users for free. It is nice that they don’t charge you for growing your business and your team.
In terms of pricing and functionality, another interesting feature is that unlike other software, Xero makes most features available to all its users (except for multi-currency, expenses and projects that are available only in the top-tier plan). The $9-a-month early plan is, however, quite limited, and is only suitable for businesses that are just starting out and are not ready to commit to anything more substantial. It is limited to five invoices and quotes, five bills and twenty bank transactions. The $30 growingplan unlocks those limits, while the $60 established option allows you to work with those extra features mentioned above.
Xero is great for inventory management, allowing you to track your items in real time. It does not provide its own payroll service, but recommends their partner Gusto, which can do the job for $39/month base + $6/month per person (free trial provided). We like the fact, that Xero is mobile integrated and allows you to keep track of Gusto as well as invoicing and your banking feed from your phone and even your iWatch.
Probably the most well-known accounting software, QuickBooks can automate a lot in your business. Recurring invoices, intuitive banking feeds that are finding matches automatically, sophisticated and easy reconciliation, built in reports: QuickBooks seems to have it all.
QuickBooks also has the largest app store of any software, allowing you to automate many other tasks based on your QuickBooks data (use TSheets for time tracking or Flowless for inventory auto-ordering and more).
QuickBooks offers a variety of pricing options, starting with a $10/month Self-Employed plan. It is designed for independent contractors, which will allow you to track your expenses and sales and will give you an option to invite an accountant to prepare your tax reports for you based on the gathered data (at no additional cost). The next tier Simple Start unlocks unlimited estimates, invoices, and sales receipts as well as phone support and many other features that will be appreciated by sole proprietors, LLCs, partnerships, and other types of small businesses for $20/month.
Bill management, time tracking, accepting payments, inventory and project management are all available either in higher tiers or at an additional cost.
Most people from the tech world would say that only cloud applications are the future, but QuickBooks Desktop has been proving otherwise so far. It is not cheap if you don’t have a good cash flow (paying $299.95 at once does seem more than even paying $35 a month, which turns out more if you do your math), but it has many advantages. QuickBooks Pro, which is available for a one time payment of $299.95 (as with any software, discounts are often available) once installed on your PC will allow you to track your income and expenses, send invoices and estimates, manage reports, inventory tracking, manage and pay bills and work with budgets. Other features are available at extra cost (payroll, tech support, backups, annual upgrades, hosting). This software might be overwhelming if your business is very small, but if you are looking for a stable solution and do not need high mobility of having your data in the cloud, QuickBooks Desktop might be for you. It also offers higher tiers for mid and large sized businesses.
Which software do you use? Let us know why you chose it in the comments below.