Is QuickBooks the Right Accounting Software for Your Small Business?

 

The search for accounting software can be a confusing and overwhelming process.  A Google search for “small business accounting software” yields 6.75 million results.   Trying to get recommendations from other business owners often results in passionate discussions about why a particular program is great while another one sucks.  Your accountant might point you in the right direction, but will sometimes recommend a program that they are comfortable with using, but might be too technical and not necessarily be the best solution for you.  With so many choices out there, it can be difficult to know what to do.

If you are seriously contemplating purchasing or replacing your accounting software you have undoubtedly heard of QuickBooks.  Intuit (the corporate entity behind QuickBooks) has brilliantly extended their reach to the point where the large majority of small businesses use their program in one form or another.  Some people love it, some tolerate it and some actively seek out alternatives.  This article is meant to provide some insight on whether QuickBooks is the right choice for your small business:

Cost:

One of the most attractive aspects of QuickBooks is its relatively low cost.  There are many alternative pricing plans, depending on your needs.  You can pay monthly or annually and QuickBooks Pro starts at $230 annually.  Online plans start at $12.95 per month.   Payroll requires a monthly or annual subscription.  For further details, refer to their product list.

If you are a freelancer or independent business owner with a handful of transactions a month and minimal accounting needs, there are several free options for accounting software.  PC Mag lists some here.

Size/ Number of transactions:

QuickBooks is primarily marketed towards small businesses (although Enterprise is geared towards medium sized entities).  QuickBooks is designed for small businesses with 20 or fewer employees and annual revenues of less than $2 million.  There are limits on the number of items (customers, vendors, inventory items etc) that can be created which is approximately 10,000 for each category (if you have more than this you should definitely be looking for different software).  Additionally the number of simultaneous users is between 3 and 5 with QuickBooks Pro and Premier respectively.

Note that if you have a large number of transactions or items, it can significantly impact the performance of QuickBooks.  There are several solutions to this problem including creating a new company file, annually and hosting the QuickBooks database on its own server.  Alternatively, it might be time to look for a different solution.

Online/Cloud Access:

Being able to access your information anytime and anyplace is becoming more of requirement for small business owners.  QuickBooks offers a variety of different plans starting at $12.95 per month.  If you do your payroll in-house , the cost goes up to $50+ per month.  While QuickBooks online is a good solution, there are several other accounting software allow you access your files online.

Update: This has recently become available in Canada.

Addons:

The advantage of being the most popular small business accounting software is that it has spawned an entire industry around it.  There are hundreds of add-ons for QuickBooks that help manage inventory, invoicing, point of sale systems, reporting and web-stores.  The integration that this offers can significantly help reduce costs and administration as well as improve accuracy. 

Payroll/Credit Card:

If your business has employees, QuickBooks has an excellent payroll module that greatly simplifies the process for calculating deductions, issuing paycheques and preparing year end payroll returns.  Another advantage of using QuickBooks payroll is that it integrates with your accounting, rather than having to import a payroll file with third party software (although they all tend to have QuickBooks compatible reporting).

Complexity:

QuickBooks is actually quite good at dealing with complex transactions.  They have tailored versions for manufacturing, wholesale, retail and contractors, which can help simplify the accounting process.

Although they have a multicurrency function, it can definitely be improved and can be quirky if you are dealing with more than a couple of different currencies.

Inventory/Invoicing/Vendors/Customers:

QuickBooks actually has a pretty good inventory tracking system. You can build groups and assemblies from raw materials and individual units as well as set prices for different customers. 

You can customize the look of your invoices, however there are limitations, some of which have been addressed in QuickBooks 2011.

You can keep track of your customers and vendors including all of their contact information, pricing details, shipping info etc.  which can be helpful in preparing mailing lists and as a database.  Details are easily exportable into excel.   

Banking:

Preparing and printing cheques can be done by using the “pay bills” function.  You will need to order preprinted cheques that are compatible with QuickBooks.

Quickbooks allows you to import your bank statements, which automatically matches transactions that have been entered.   This does not always work as we might want it to, but it definitely helps reduce the time taken to do bank reconciliations.

Import/Export to Excel:

Most reports can be exported to excel, which is great for manipulating data.  Importing data into excel is more problematic as files have to be formatted very specifically and there are limitations on what can be imported.   There is fairly inexpensive third party software that can help with process, however this too is limited.

Ease of use:

QuickBooks is a simple, user friendly program designed specifically for non accountants.  Like most software you do have to have an understanding of what you are doing.  If you plan to use QuickBooks, you should definitely invest some time in their training resources.  This can also help you take advantage of some their more advanced functionality.

Security:

QuickBooks allows you to set security levels and user permissions.  It is however a little too easy to delete transactions and manipulate data compared with more sophisticated accounting software.  If you do have QuickBooks it is important to be aware of these potentials and ensure that you have good controls, if someone else is using the system.

 Having used QuickBooks extensively, I am often quite impressed with its functionality.  It continues to improve every year, and has some great features and flexibility that more sophisticated accounting software is often lacking.  And while it is not for everyone, it is definitely worth taking advantage of their free trial to evaluate its effectiveness for your business. 

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Ronika Khanna is Montreal accountant who helps small businesses with their tax, accounting and financial needs.  To receive regular updates of articles pertaining to small business, accounting, tax and other topics of interest to business owners you can sign up here.  You can also follow her on Facebook or Twitter