Your Accounting System consists of many components.

Accounting Software is one component of your Accounting System. While many accounting software options will cover some or even all of the components below, many of these can’t be completely taken care of by your Accounting Software.

We’ve gathered some of the most common components we see clients needing to think about. While some or even most of these may not apply to you and your business, and you may need to think about other and more components, this is a good start. Let’s dive into the details, shall we?

Client / Customer Payments & Invoicing


You know you need to get money into your business. But just how does that happen? It comes down to one service: a payment processor or merchant services processor.

Retail, Restaurants, and In-Person Providers

If you’re offering goods and/or services to people in-person, it’s likely you have or will need a Point of Sale System. These are usually known as a “POS.” And yes, I giggle at this acronym every time. Popular systems for this include Square, Toast, Clover, Lightspeed, and more.

If you’re an in-person service provider, especially one subject to HIPPA, you’re likely using a practice management system that offers this service to you. SimplePractice and IvyPay are popular options here.

Other Service Providers

Your Accounting Software may be your biggest ally, though your accounting software can’t process payments alone. Most accounting software can connect with Stripe. Some software will even give you a, “create account and connect,” button right inside the software.

But before you click that button, be aware of what you’re clicking. Read the systems and the tools – there’s more than one payment processor out there, and many will connect with your Accounting Software’s invoicing feature. This is the magic ticket that gives you a, “Pay Now,” button on an invoice you send to a client. These include, but are not limited to:

  • Square
  • Chase’s WePay
  • PayPal
  • Venmo
  • Proprietary Payment Processing offered by the accounting software
  • Specialized processors either to the industry or to the clientele 

Regardless of what you select, make sure you read the fine print. Select something that’s widely integrated and at least somewhat merchant-friendly. Stripe and Square fit this bill. Chase’s WePay doesn’t integrate with as many systems. PayPal is notoriously not friendly or supportive to/of businesses. PayPal and Venmo act more like a bank than a payment processor.

You may need to make use of multiple options within your Accounting System. That need will be based on your business, your clientele, and the boundaries you want to set in your your business operates.



This is really only relevant if you have employees. Except in very rare circumstances, if you’ve made an election to be treated as an S-Corporation, you do have at least one employee.

Payroll Systems help you process payroll by determining employee withholdings, employer taxes, paying those taxes, quarterly and year-end reporting, and more.

If you have or know you will soon have employees, it’s a good idea to think about your Payroll Software or Provider and what you’ll need to record this activity in your Accounting Software.

Most solutions will either directly integrate with your Accounting Software or provide you with a report to easily record the activity. Exactly how this happens will depend on all of the factors.

Advisory clients enjoy the support of receiving a process designed to work for them and their business and meet all the end goals, including getting that information from the Payroll System or Provider to the Accounting Software.

Asset Management


Before you start with the buts, almost every small business has a need for asset management to some degree or another. This is more than your bank account.

Tangible Personal (Business) Property

This can include any physical object you use in your business. Think your computer and peripherials, mobile device(s), pens, paper, glue sticks, desk lamp, chair and desk, etc. While these are generally immediately dedcutible for income tax purposes, you may need to track these for personal property taxes.

That tracking can be as simple as a spreadsheet with a name or brief description of the asset, it’s purchase date (year), original cost, and disposal date. Before you start worrying about tracking every pencil though, take a deep breath. The details are more extensive than what this will cover. Current and onboarding Advisory clients enjoy further support and explanations on what to do with this.

Inventory Management

If you sell goods, you have inventory. If you make goods, you have Raw, WIP (Work in Progress), and Completed Inventory. All of this adds up to the necessity for an Inventory management system and/or tool. Again, that might be as simple as a spreadsheet and it might be something your accounting software has inside of it and it might be an external system like FishBowl designed specifically to track inventory.

Remember, Asset Management is just one component of your Accounting System. It doesn’t need to be more complicated or extensive than what your business needs. And it doesn’t have to be set up immediately.


Expenses & Bill Pay

If you generally spend what you need to as you need to spend it by either providing a credit or debit card, or even writing the occasional check, this likely isn’t something you need to be concerned with.

But, if you work directly with and regularly pay service providers and/or have payment terms (i.e., you don’t have to pay the bill immediately upon receipt), having access to Bill Pay (Accounts Payable) may be helpful.

Accounting System Only

Sometimes, you just need a place to gather all the bills you owe together into one place. Depending upon your accounting software, you may have access to this immediately and you may need to change the tier you’re on to gain access to this feature.

Accounts Payable within your Accounting Software will let you record something you need to pay (a liability) immediately and pay it later (when the bill is due). That’s only half the equation: you also need to get the cash to the vendor or service provider. Some Accounting Software will do it all right inside of the system. For most though, you’ll need to take an action inside the Accounting Software and outside the Accounting Software. For example, you might use your bank’s bill pay system actually pay the bill.

External Payment Systems

There are tools such as Bill, Melio, and even Gusto that serve the need of sending money to a vendor or provider without using the vendor or provider’s payment portal (i.e. a, “pay now,” button on an invoice). Your bank likely has an offering for this as well.

You don’t have to use one of these tools, including your Accounting Software’s bill pay feature. This is just one reason why Selecting Accounting Software is so important – you may not need these features right away, but being aware of them will help you make a better decision on what goes into your Accounting System.

Bank Account and Credit Card Activity

We visited this in Selecting Your Accounting Software, and we’ll visit it again here, briefly. If you’d like to go more in-depth, read about Selecting Your Business Bank here.

So much of the modern accounting cycle is focused on importing the activity (feed) from your bank account(s) and credit card(s), it’s worthwhile to include this as another component of your Accounting System.

Some banks and credit cards play very nicely with this importing feature. And some don’t play well with it at all. There are of course work arounds and options to work with your bank, even it’s one that doesn’t play as nicely.

If you want to rely as little as possible on processes, consider selecting a bank made for businesses to fulfill their accounting needs. We use and recommend Relay. If you’re a current or onboarding client and would like to make use of this powerful tool, let us know so we can get you started with high quality, white-gloved onboarding.

But What About!?

There are, admittedly, many more potential components within an Accounting System. I’ve not included so many things here. The things that are missing tend to be things that small businesses either don’t need or that quality accounting software will offer a minimal solution at the least. If that minimal solution isn’t enough for you and your business, we can certainly work together to come up with a solution.

If there’s something missing here that you want more information about and/or something you need to go further in depth on, please let us know so we can work with you to come up with the right and best solution for you in rounding out your Accounting System.

The best Accounting System is the one that’s responsive to you, your business, and changes you and your business experience over time.

As you build your business and your business’s systems, you may need to come back to these questions and components. Your business won’t always be the same. That’s okay. It’s beautiful and wonderful. And just one more reason to make sure you’re making selections that will support you now and in the future.

This post has been developed as a generic explanation of Accounting Systems. 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).

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