What Accounting System Should I Use?
This simple question can have a huge impact on your business.
Why is this question so important?
Why is it crucial to answer this before hiring an accountant?
Well, let’s start by taking a look at the different types of systems available.
There are 4 main types of Accounting Systems;
- Paper & Pen
- A Spreadsheet
- A Desktop Based System, &
- A Cloud-Based System
Let’s discount pen & paper. If you come across an accountant still using pen & paper, RUN.
So, what’s next?
A Spreadsheet
They are the next evolution from pen & paper.
Excel & Google sheets, to name just two, are both great products. They made life so much easier compared to the old pen & paper days.
However, just like pen & paper, spreadsheets have become outdated.
They often riddled with mistakes AND are extremely limited when it comes to any sort of automation.
Don’t get me wrong. If you’re a very small company and you’re just starting out it could be an option. Maybe you have a handful of clients, minimal expenses and you don’t plan on growing. Then maybe spreadsheets are the right answer for you.
However, if you do start to grow, you’ll slowly see the cracks appear, mistakes will pile up and time will vanish right in front of your eyes. Oh, and not to forget – higher accountancy fees.
A Desktop Based System
And then came desktop systems.
The main difference between these and spreadsheets are that these systems were created specifically for accounting & they provide much more in terms of functionality. Such as, creating sales orders, invoices, and payroll exports.
They sit on your computer’s hard drive meaning the system itself as well as all your information and files are saved there too.
While this might sound like a good thing, it’s not.
This means you need to log into whatever computer you have your system installed on whenever you need to check a figure or anything else. Not to mention that it’s using some of your computers precious space and potentially slow down your computer.
These systems tend to come with a hefty upfront purchase cost too. The last thing us business owners want is to pay a crazy amount of money upfront just to know how much money we have to give to the taxman. This is a cost that new businesses simply don’t need.
You might be familiar with the company Sage. For years they dominated this space. More recently, that’s changed dramatically.
Why?
Sage was designed for accountants. NOT for business owners.
These desktop systems while great for accountants aren’t great for business owners. They generally take a lot of time to update and are usually about 2-3 weeks behind reality. This doesn’t provide great insights for business owners and can lead to costly mistakes.
A Cloud-Based System
And finally, there cloud accounting systems. These are the latest evolution of the bunch.
These systems are designed with accountants AND Business owners in mind. Everything is stored on the cloud so you can access them from anywhere. Most of these systems work on any computer, tablet or phone with an internet connection so no matter if you’re about to run into an out of office meeting or if you just want to check your revenue while you’re sipping a drink on the beach, everything is right there at your fingertips.
But that’s not it.
There are no crazy upfront fees.
You can tailor them to your business needs with countless integrations for anything from payroll to project management.
And the potential for automation with these systems is amazing.
We here at Bradán love Xero as cloud accounting system for many reasons.
Do you want to learn more about our choice & what Xero is capable of? Check out our article – Xero and It’s Add-On Marketplace
Conclusion
Hopefully, this article has helped you decide which system is best suited to your individual needs. Now you can go find an accountant that’s an expert with your chosen solution. Sometimes it’s not clear which option is best. This is an important decision and every business is unique with unique needs.
The best way to ensure you’re making the right decision is to speak with a professional.
Why not schedule a call with us today? You’ll be glad you did.
