Selecting Your Accounting Software
Accounting software can make or break your experience with your business’s finances.
The best accounting software for you is the one that you’ll use and you’ll feel confident in making use of.
FreshBooks is Pretty
Take a peek here: https://freshbooks.com
It started as invoicing software that sought to solve the problem from a business owner’s perspective while also respecting the business owner’s client(s) needs. As it’s developed into a fully functional accounting system, FreshBooks has kept that ethos at its core. It’s made for the business owner first, not the accountant.
Strengths
FreshBooks does best for small businesses with four or fewer owners who bring the majority of their income in by actively sending an invoice to a client. I also really like it for clients who may need to zoom in on one aspect of their business at a time and/or who need a little help maintaining a focus.
Weaknesses
Though it can run reports on a cash basis, these start to get inaccurate if you’re using the AR (Invoicing) system to its fullest potential. The bank import tool does not add new money in (income) transactions to the system automatically. This can create some confusion and/or frustration.
Who it’s for
It’s really made for small service providers, especially those who currently and will soon need a little more on the client relationship management than just some invoices, debits, and credits. Think small amounts of project management, time tracking, estimates and proposals, and billable expenses.
Who should avoid
Business who need to track location or project type details on their Profit & Loss statement, businesses with more than four owners, ecommerce and businesses with significant inventory, and businesses already working with a bookkeeper who does not want to support this system. Businesses who expect to need many or multiple users to have access to the accounting system (excluding your accountant-type people) may want to steer away as FreshBooks does charge for each additional user.
Cost
As of May 15, 2024, FreshBooks offers subscriptions starting at $19, $33, and $60/month. Crayon Advisory clients need to be at the middle tier at least and should reach out to have us do the initial set up and get you the best deal possible.
How to get started
If you’re not a Crayon Advisory client and are not considering becoming one, go ahead and sign up on the website, then head here for a course that will help you take the first step in starting your FreshBooks fresh. If you are a Crayon Advisory client or are considering becoming one, please let me know you’d like me to start your account. I’ll have a few more questions for you, but, this way you get the best possible deal I can give you.
Xero is Minimalist
Take a peek here: https://xero.com
I describe Xero as the software company that looked at what a database can do and asked how that database can serve accounting functions and needs. With a straightforward, no-nonsense, minimalist design, Xero works to give you more of what you need, and less of what you don’t.
Strengths
While it has many bells and whistles, those bells and whistles are subdued. If you don’t need them, you likely won’t ever see them. With its origins toward doing one thing well and integrating with other software to do other things better, Xero plays really nicely with integrating with other tools. And the integrations aren’t likely to go away. Xero’s reporting is top-notch, and, as a personal favorite, can export those reports directly to Google Sheets (just a tiny plus for a Google Workspaces based business).
Weaknesses
Xero’s inherent flexibility can get overwhelming and leave you searching for an unnecessary solution – it’s easy to over complicate the process. The minimalist design can turn into a bit of a bug in that it can sometimes be harder to find the thing you’re looking for because it all looks so sleek.
Who it’s for
I love ecommerce clients being inside Xero. It’s also great for those who need and thrive from a clean slate, are used to/comfortable with an Apple/Mac environment, and don’t need or want graphics to find your way around. It’s also really great if you need your accounting software to do some more complicated or specific project management or if you need to track activity by location or property.
Who should avoid
Xero is among the least opinionated accounting software out there. Unless you really need to rely on graphic design to navigate around, it’s a solid selection for just about any business.
Cost
As of May 15, 2024 Xero offers three tiers at $15, $42, and $78/month. There is often a special running that will give you a discounted rate. Crayon Advisory can also sometimes offer a reduced or discounted rate to clients. Many small businesses have their needs met at the lowest tier.
How to get started
We generally encourage clients to sign up on their own and then invite us as an accountant user. If you prefer, we can set this up for you. Just let us know this is the route you’d like to go.
Zoho Books is part of the Zoho Universe
Take a peek here: https://www.zoho.com/us/books
Zoho’s business suite is tightly integrated with this cloud based solution. It can be free, though its capabilities are limited.
Strengths
Zoho has all of the markers of a fully develeoped accounting system. It’s biggest strength is that it’s part of the Zoho Ecosystem. It also has strong integration with other software and platforms.
Weaknesses
Finding direct support from a knowledgeable accounting expert will be harder – it’s just not as popular. Less popular doesn’t mean less good.
Who it’s for
If you’re actively using or digging deeper into the Zoho Ecosystem, it’s worthwhile to look deeper into Zoho Books.
Who should avoid
If your spirit is a little less adventerous and you’re likely to need a fair bit of help, lean into a different option.
Cost
As of May 18, 2024 Zoho Books offers four tiers at $0, $20, $50, and $70/month. There is a price break if you pay for a year at a time.
How to get started
You can sign up for Zoho books here. Once you’re starting to get cozy there, invite us as an accountant user by following these instructions.
Can't I use a Spreadsheet or Notion?
Technically, yes, you could use one of these options. It is entirely possible to find or build a template within one of these or a myraid of other platforms that will re-produce what a double-entry method of accounting system does.
But. And that’s a big giant but. But, you’ll need to maintain the system, manually roll things over from one year to the next, and likely run into several other problems and concerns.
Using an accounting system does (usually) end up costing some amount of money. And not every business will have immediate or apparent return on that investment. It feels like a drain. But, the difference ends up being night and day as you adopt a quality system.
If you’re really wanting to use something a bit homemade, please talk to us about what you like, don’t like, and how you plan to go about doing this before you do.
Wave can be Free
Take a peek here: https://waveapps.com
Wave came onto the market about a decade ago as a free cloud based accounting solution. Today, their free option is incredibly limited: it will not connect with your bank account. This does mean you’ll need to manually input every transaction into the system if you’re taking the free option.
Strengths
Cost is Wave’s biggest strength. It’s the lowest-cost option. The minimal bells and whistles also keeps you focused on the necessities, with fewer things to be distracted by.
Weaknesses
Wave is a little clunkier to use than the other options. It has almost no bells and whistles and there is limited suport from professionals. While we do offer some amount of support, we stay out of the weeds when providing that support.
Who it’s For
Businesses who have no need of third party app integrations, project management, or significant automation procedures may end up okay here.
Who Should Avoid
Businesses who need and want their accounting software to reliabily automate certain tasks, people who are easily frustrated by just thinking about accounting, and anyone who might want an external system to integrate with their accounting software should run away from Wave.
Cost
As of May 17, 2024, the paid subscription is $16/month, with a lower cost if you pay for a year at a time.
How to get started
You can sign up for Wave on your own. Once you have, please invite us to your account as an accountant user.
GNU Cash is an Open Source Standby
This open source desktop software covered the basics as far back as the early 2000s when Megan used it for their own personal finance needs. It even connected to many bank accounts directly, and still can!
Strengths
A desktop based option means you have complete control over your accounting and bookkeeping. And, yes, this runs on a Windows and a Mac, most Linux distributions, and many other systems. It will let you do the things you need to do and produce the reports you need as a business owner. It can pull bank feeds automatically from certain banks. And, if do a fair bit with investments, you can track your stock values as well. One software for business and personal activity can be a huge advantage!
Weaknesses
With the software on your computer, backups and security are 100% on you. We won’t accept direct access to it, which means you’ll have to provide us with reports to do things for you. We also can’t provide you with direct support – i.e. go in and click the buttons that need clicking.
Who it’s For
The adventurous business owner looking for a quality, if simple, free accounting software solution. You should have a computer (desktop or laptop, but not a tablet, iPad, or phone) and an understanding of installing software 1990s style. If you’re part of the open source and/or Linux communities, you’ll be pretty comfortable here.
Who Should Avoid
If you’re not super comfortable with computer management, this is not the option for you.
Cost
There is no direct monetary cost. The cost associated with this software is usually time, effort, and opportunity. We can send you documentation, but, we can’t click the buttons for you.
How to Get Started
Download the correct package installer for your system from the link above and follow the instructions and documentation.
QuickBooks Online Exists
As the small business accounting software with the most marketshare in the US, we can’t just ignore this option. It’s a popular option for two reasons: (a) Intuit (the parent company) does an incredible job of marketing and (b) it does a halfway decent job of what needs doing when you use it correctly/as intended. When you don’t follow the instructions, it’s the fastest at making a mess that takes time to clean up. Which is exactly why we tend to steer our clients toward other options.
Flavors
Before we tackle the same questions as we have everywhere elese, it’s worthwhile to mention the flavors. We’re focused in on QuickBooks Online because it ticks our boxes of what’s necessary from an accounting system, is cloud-based, and isn’t slowly going away. If you’re looking at QuickBooks Self Employed or QuickBooks Desktop, we encourage you to reconsider. If you’re already using one of these and are looking to move away, we can help.
Strengths
QuickBooks Online (QBO) is easy to find support for from a bookkeeper, fractional CFO, or other accounting professional. It has many bells and whistles, and makes many promises to take care of your business from end to end.
Weaknesses
Becuase of how QuickBooks handles certain transactions, it’s really easy to duplicate income and/or an expense. While it’s always best to follow best practices, it’s essential to do so when using QuickBooks Online.
Who it’s for
If you know you’ll need or want significant, daily or monthly help with the in-the-weeds bookkeeping, this may be the best option for you. It’s also the right choice if you make use of external systems that need to integrate with QuickBooks Online or you’re already using it and it’s working out well for you.
Who should avoid
If you’re not a fan of following the bouncing ball every single time, this is not the software for you. If you’re easily overwhelmed, feel the need to understand the why behind what you do and have a harder time with accounting in general, you might want to consider another option.
Cost
As of May 18, 2024, QuickBooks Online offers three tiers at $30, $90, and $200/month. While many small businesses do just fine on the lowest cost option, they often need to jump up to the mid-cost option (currently $90/month) relatively quickly.
How to get started
You can sign up here. We don’t offer set-up services for QuickBooks Online.
Are there any other options?
There’s almost always another option. If there’s an accounting system you like (or think you might like), we’re happy to take a look at it for you and help you evaluate it. We’re rebels at heart, too, and understand the desire to go against the grain. We’ll support and encourage you when it makes sense, and often provide you with some warnings and considerations in making that decision.
Don’t panic though. Making your accounting software selection is a process, and there’s more to consider than the actual software.
Some questions for you about your business
These questions are a pretty good starting point in selecting your accounting software. These may lead to more questions. They may be the end of the trail for you. Choosing your accounting software is as personal a decision as it can get. As much as you can get advice from others (professionals, including us, friends, family members, business besties, even your mom’s neighbor’s Uncle Frank who heard about this one software that’s amazing and solves all the problems), the best choice is the software you can stand to look at and feel confident in attempting to navigate around.
How does your business earn money?
This is important. A service provider (such as a therapist, an attorney, or even a coach), a social media influencer, a maker, and someone who sells goods strictly via ecommerce will bring money into their businesses in a very different manner. And don’t forget about recurring billing or subscription model billing – this changes how you might approach accepting those all important dollars. Take a moment to write down how you receive money currently, as well as how you’d like to receive money.
Where are your clients?
As a US based tax preparer, my head and bias (and my client base) is focused toward the US. However, if you have or expect to have international clientele, this is something you should consider when making your selection.
Software Integrations
Are you already using a different software for part of the accounting cycle? The most common things we see this with are Accounts Receivable (Invoicing), Bill Pay (Payable or Vendors), and Payroll. And what about related tools – your CRM, your project management, or anything else you use within your business. Also be aware that not all things need to integrate, and in some cases having these things integrate is a really bad idea (HIPPA anyone?).
Does your industry have a standard?
There are approximately eleventy billion accounting solutions out there, many of htem made for and/or catered to specific industries. If your industry has something it likes that isn’t listed above, it’s worthwhile to look closer.
How many active clients do you have?
Some software tiers their pricing based on active clients. Knowing and understanding how many active clients according to the software’s definition can guide you toward the tools and services you need.
How much of a workhorse do you need?
Will you need or want it to track projects for you? What about keep track of time? Be your CRM? Many accounting systems will promise to do these things and more. And some of them can do these things to an extent. But, at their core, they’re still accounting software.
What do you want your accounting software to do?
This one is really open ended and may even be bordering on existential. But, hear me out. Accounting software is designed first and foremost to deal with debits and credits – that is, to keep track of your finances. Some software can give you a short-term income projection. Some is better at integrating with other software or tools than others. The sky isn’t quite the limit, but, if there’s something you just wish or hope could or would happen, write it down. You can’t get what you don’t ask for.
What does your mentor use?
If you have someone guiding your hand through your business, it’s also worthwhile to ask them what accounting software they use for their business.
This can be a double-edged sword though – their answer amy surprise you. You may find out they’re taking notes on paper or putting receipts into envelopes to try to read a year later. (Hint: neither of these options is a good one).
So you did some soul searching. Now what!?
Now, it’s all about getting the right match. We’ll run through the accounting software we recommend and why below. If you’re a client, you can always reach out with specific questions you came up with after evaluating your needs. Or after looking at your needs and your options and marrying them together. And if you’re not a current client and you’re hoping for some support with this decision, it’s a good time to consider onboarding.
This post has been developed as a generic explanation of Accounting Software. This information is written to be informative and is not tax advice. You should consult with your tax advisor as to how this information applies to your situation. Your specific needs may vary and may cause specific attention to need to be given to your processes. You should speak with your tax professional regarding the applicability of these issues to you and your business (and, yes, that includes Crayon Advisory if you are a current or onboarding client).