So you’ve come to the conclusion that you need to upgrade your accounting process and you’re wondering what to do about it. If you’ve ever wondered about using cloud accounting software, you’ve come to the right place. Maybe you’re not sure it’s right for you or which one you should use. We’ve reviewed some of the most popular cloud accounting software products: Freshbooks, Wave, Quickbooks Online and Xero.
Before we get into the features of the most common programs, there are a couple questions to think about: (a) what are the needs of your business and (b) why use cloud accounting?
What are the needs of your business?
We find that cloud accounting software vendors are pretty upfront about the fact that their software isn’t suitable for every business. For example, service-based businesses don’t have the same needs as inventory-based businesses. So, here are a few questions you should think about:
- Do you have a service-based business or inventory based? Or, is it a combination of both?
- Do you want software that will automatically generate invoices and payment reminders?
- Do you want your customers to be able to pay their invoice by clicking on a button within the invoice?
- Do you want your employees to interact with the software (e.g. to generate invoices on-the-spot)?
- Who is in charge of your bookkeeping and are they willing to learn a new software?
- What’s your budget? Free, freemium and premium are all available.
Just keep in mind, when it comes to this kind of software you will tend to get what you pay for. If free works, great, but don’t try to go cheap if you have a sizeable business. In the end, getting a high quality software that meets all of your needs will save you more than enough time (and frustration) to cover the cost.
Why use cloud accounting software?
Bookkeeping isn’t the most glamorous part of being your own boss, but it is hugely necessary. From dealing with the tax man to figuring out if you’re actually making money, keeping your books in order is a must.
Truth is, cloud accounting programs are not the typical bookkeeping software that you might have encountered in a torturous high school class nor are they the kind of software your mom uses *cough*. They are, on the main, easy to use and easy on the eyes. The big feature of all the software covered in this review is that you can download the transactions from your business bank accounts and credit cards and simply code the transactions to the right accounts. The programs will learn, over time, where to automatically code common transactions. You just deal with one off transactions and review your balances to make sure things have been coded properly.
Some other handy features of cloud accounting software:
- You can give your accountant access to your online account. This makes the year end process so much easier and faster. There’s no fooling around with multiple versions of your year end and no corrupted backups.
- Everything backs up to the cloud and is always accessible.
- Most cloud accounting software providers offer a subscription to their services, often based on your usage levels. So, no paying for updates and no paying for a bunch of features you don’t need.
- Reduces or eliminates all those bits of paper. Many of the programs allow PDF’s of receipts to be uploaded to support your bank transactions. A great feature to have if you’re business ever gets audited. Also great if you have a home office and are short on space (or short on interest in filing).