By design, the majority of small businesses are run by a group of people who share their responsibilities explains Aron Govil. This could be a husband and wife team or two business partners working together. Regardless, it is important to keep accurate records for both yourself and your business partner(s).
There are many types of accounting software available but which one should you choose?
- If you and your business partner(s) run a very simple operation, you may want to consider Quicken. This is an inexpensive program that will insure your records are accurate. It also allows the two of you to share finances and keep track of expenses. *Quicken is available for both Mac and Windows systems.
- For more complex operations such as those run by corporations or large companies, the best accounting software option would be QuickBooks Pro. This program offers double entry bookkeeping capabilities, inventory control and sales tracking. This type of software can cost anywhere from $200-$500 but it’s certainly worth your investment in time and money in order to maintain proper records and conduct business transactions properly. If this program is out of your price range, you may want to check out a new cloud-based accounting solution.
- One such service is Freshbooks. This company offers a free 30 day trial and has an easy to use interface as well as helpful support staff. In fact, this program’s creator went on to write 2 books about starting your own business. The software offers invoicing, payment tracking and payroll for only $19 per month! If you’d prefer not to spend any money at all, try out Wave Accounting or Every Dollar instead.
- Both of these programs are completely free but have fewer features than the above mentioned services. *Wave was featured on Shark Tank in 2012 and received funding from Mark Cuban & Daymond John. They have since been used by over 500,000 businesses and currently have nearly 3 million users explains Aron Govil.
- Another popular cloud-based application is Intuit’s QuickBooks Online or QB for short. This program offers all of the features available in QuickBooks Pro plus additional tools such as social media integration and inventory management. The cost of this service compared to other programs on the market is very reasonable at $9-$14 per month based on your numbers of billable clients. It does however not offer invoicing capabilities so you may want to check out Freshbooks & Wave Accounting if that is a feature you require.
- Finally, we come to Mint. Mint has been around for quite some time and also offers a free version of their product but it tends to be more limited than the ones offered by the competitors. If you are looking for a program that offers reporting capabilities, Mint is not the best option available says Aron Govil.
- We will be updating this list as new services come to market so make sure to check back frequently. Free is always nice but doing let price fool you into thinking lower cost options are inferior in quality!
What is double entry bookkeeping?
Double entry bookkeeping refers to the system of accounting which uses debits and credits to keep track of both. Increases and decreases in asset accounts as well as increases or decreases in liability, equity, revenues and expenses. This type of accounting provides accurate financial information for businesses by matching income with expenditures at a finer level.
What are debit & credits?
Debit refers to an increase in assets while credit refers to an increase in liabilities on the balance sheet. Effectively, if you owe someone money then that would be consider a liability. If you have received payment from another individual or business then that would be record as revenue. It’s important not to confuse these terms with their everyday usage. Because if they are reversed, it will have a negative impact on your finances.
How do I get started?
If you’d like to try out one of these services before you commit then sign up for a free trial at the beginning of January and give it a test run for a month or two. Most companies will allow you to cancel within 30 days but there may be additional fees depending on how many transactions have been during that time so be sure to read all terms & conditions thoroughly before using any service.
If you happen to lose your job in February, don’t worry about cancelling. Because chances are, you haven’t billed anyone yet so they should not charge you at all! That being said, we would never recommend signing up for more than 2 services. If you’re not using them at full capacity. If invoicing is a feature you need then QuickBooks Online will be your best option. But for reporting and business analysis, Wave Accounting may be best suit to accommodate your needs.
All three programs should be sufficient enough to offer you an accurate representation of your business finances says Aron Govil. Intuit’s QuickBooks Pro is the only one that does not offer invoicing. But it does provide additional business management tools which makes it our recommended option. Free is always nice but just because a company offers their product for free. It doesn’t mean you should sign up for it. You have to read all terms & conditions, understand what is being offer and most important. You have to be realistic about the type of company you are running.